It is Veteran's Day and it is a day to honor those who have served, and continue to serve, our country. I am a Military Relocation Professional (MRP) and love working with veterans! It is wonderful to work with them and to help them obtain their dream of having a home. I have discovered, sadly, that there are many myths about VA loans that can harm military buyers when a seller sees they are using one and often that the veteran him/herself are unaware are untrue. I thought today would be a perfect day to write and dispel some of these myths.
Myth #1: Qualifying for a VA Loan is a Very Difficult Process
As with any home purchase, especially in the competitive market in Colorado, the first step is to find a lender who can actually do the VA loan. You want to see what you are pre-qualified for so you basically know what price range you and your real estate agent may want to explore to start looking at homes. How disappointing to be looking at $400,000 homes when really you only qualify for $350,000 and cannot afford the "dream home" you found. It may also go the other way around. You may be looking at $300,000 homes when really you could afford a $400,000 home.
The U.S. Department for Veterans Affairs (VA) has a web site that can explain the process:
Often the VA Loan programs are less difficult in the qualification process for veterans. In fact, veterans may qualify for a VA loan and not qualify for other loan options. It is worth at least looking into your benefits.
Myths #2: The Loan Limits on a VA Loan are Extremely Low
Loan limits for VA loans do not mean that the VA applicants cannot afford more expensive homes. If buyers add some of their own money, they may qualify for higher limits of "conforming loans." Most US counties as of 2017 have a maximum loan limit of $424,100 for a single family residence, $543,000 for two units, $656,350 for three units and $815,650 for four units, but it may be higher if you live in certain counties. Obviously the best way to know is to speak with your lender.
Myth #3: VA Loans May Not be Used for Short-Sales or Foreclosed Real Estate
VA Loans may be used for foreclosed or short-sale property, sometimes with no money down. Obviously this would depend on the condition of the home which the veteran is trying to purchase (see the following Myth #4 regarding appraisal).
Often the VA loan borrower must come up with cash before or up to about 48 hours after winning the auction so many times, if the property has already gone to auction, veterans do not buy these types of homes. However, if the home fails to sell at auction, the home may go to the regular market and the closing is often within the typical period - often 30-45 days.
Myth #4: VA Appraisals are a Nightmare
If the home a veteran would like to obtain is in poor condition, then yes, the appraisal may be difficult and nightmarish. Overall, however, the VA appraisal is not that different from other appraisals.
The basic requirement is for the home to be safe, structurally sound and sanitary. In other words, as with most lenders, the home needs to have:
* an adequate roof,
* adequate heating,
* safe plumbing and electrical systems that are in good condition,
* no leaks, decay, or defective construction, and
* no dry rot, termites, fungus, or insects that may be destructive.
Myth #5: All Veterans are Guaranteed a VA Loan
Many people, including veterans, have the misconception that the mere fact that a VA loan buyer is/was in the military the VA loan is automatically.. The mistaken belief is that regardless of credit score or any other factors the VA loans are a "no strings attached" loan. This is far from the truth.
The VA loan IS under a guaranty, but that is much different than a veteran being guaranteed to get a loan. The loan guaranty only specifies that a percentage of the loan (usually 25%) is back by the US Government. In case of a default, the government will pay back that amount to the lender. No loan is guaranteed.
If you would like to explore your options with regard to buying or selling a home in Colorado, you are welcome to text, email, or call. You may also click on the "Homes For Sale" tab at the top of the page and explore the homes that may be available.
720-774-7001 (call or text)
Although I am a Colorado licensed attorney, this blog is for information only and is not to be deemed legal advise. If you have legal questions or need legal help, please contact your attorney.