7 VA Home Loan Myths
The VA Loan Program was established in 1944 and since then there have been many myths, or incorrect information, that has been circulated and passed down. It is time that we debunk those myths and explain the correct process and features of the VA Home Loan. Below are the seven most common misconceptions when focusing on VA Home Loans.
1. Other types of Financing are easier to qualify for.
Simply not the case. VA Loans have a very high allowable debt-to-income level and the underwriter can manually approve a loan if it is a make sense loan. VA Home Loans also have very forgiving credit score and history requirements allowing for as low as 550 credit for some lenders, and VA deems credit repaired if the borrower has 12 most recent months of on-time payments.
2. The VA Loan amounts are too low.
Currently there are no limits set by the VA on loan amounts with no money down for Veterans. Currently at The Veterans Mortgage Source we can do up to $2,000,000 with no money down for Veterans with clear VA Home Loan Entitlement.
3. VA Loans take too long to close.
Working with experienced VA Home Loan Purchase Lenders allow for the same turn around times as conventional and FHA loans, and the VA loan has a much higher chance to actually close. Since VA allows for higher debt to income ratios and flexible underwriting the loan has less chance for costly calculation mistakes unlike other more conservative products like conventional financing.
4. I can’t use my VA Loan twice.
You can use your VA loan as long as you have remaining entitlement and/or paid off your existing VA Home Loan. You can buy a house, sell it then get your eligibility back to reuse it. The second way to use your VA Loan again is if you pay off your house or refinance it with a different loan option, then you will receive a one-time entitlement restoration option and get your certificate back to reuse again. Please contact a VA Home Loan Specialist at The Veteran’s Mortgage Source to help you determine your option.
5. The VA Appraisal is too conservative.
The appraiser on a VA Home Loan is not going to give a lower value on a property than other types of financing. Itʼs not what they do. Their job is to give a fair unbiased value on the home regardless of the type of financing. The appraiser also has to look for standard minimum property requirements which means their job is to make sure the property is safe and sound for you to buy. Unpermitted areas are not allowed, but there is a process of getting an exception to those areas from the VA office if a licensed contractor issues a letter stating the area appears to be built to code in a workmanlike manner. Condominium homes do need to be approved on the VA Condo Approved list, but if not on the list it is possible to get the Condominium approved by your VA Home Loan Specialist at The Veteran’s Mortgage Source.
6. VA Rates are the same no matter what the loan amount is.
Generally, VA rates offered to a customer can differ. The loan balance and the credit score of the borrower can increase the loan rate or the cost associated with a specific rate.
7. There are no closing costs on a VA Home Loan.
There are closing costs on VA Home Loans just like any other type of residential loan, but there are fees that cannot be charged to the borrower that may differ from other products. It is also common in most states to offer higher interest rates that yield lender credits back for the borrowerʼs closing costs.