In my ongoing research, as well as in recent conversations, I have discovered there are a number of misconceptions about VA mortgages making sellers hesitant to accept offers from qualified buyers and keeping veterans from using the benefits they’ve earned.
Many assume that a VA mortgage will come with a lot of red tape to cause delays in the sale. In reality, the process involved with VA loans isn’t much different from that of any other mortgage program. Whether it’s conventional, FHA, USDA, or VA, my team and I frequently close loans in 30 days or less. As long as all parties work together and complete the necessary steps promptly, there’s no reason a VA mortgage should take an excessive amount of time to move from contract to settlement.
It is also believed that VA appraisals take longer to schedule, and that they are more “nitpicky” than the appraisals performed under the guidelines of other mortgage programs. While it is true that VA appraisals are comprehensive, it is for the buyer’s protection. You wouldn’t want to sell a home with lurking repairs to an unsuspecting family.
As for the appraisal timeline, it all depends on the volume of applications the lenders are experiencing, not the mortgage program itself. There seems to be some misunderstanding of the “non-allowable fees” associated with VA loans as well. The VA does have a list of fees that a buyer cannot pay; however, that doesn’t mean the seller is automatically required to pay them. Many of the fees on that list, such as mortgage broker fees, application fees, lock-in fees and processing fees, aren’t even charged by most mortgage companies.
If your estimated fee sheet includes any of these charges, no matter what kind of mortgage you’ve applied for, you should talk to another mortgage company.
The VA home loan was specifically designed to help our nation’s veterans become homeowners. As such, the program does have provisions for borrowers with lower credit scores, down to 500, in some cases, but all borrowers go through a thorough underwriting and approval process.
In fact, VA loans have had the lowest default rate of any mortgage program for the past five years. VA mortgages are appealing to buyers because they require $0 down, have no private monthly mortgage insurance, provide protections and can even be assumed by qualified buyers when/if the property is sold again. There is an upfront funding fee, but it is waived for any veteran considered at least 10 percent disabled by the VA.
Veterans also want to use the benefits they’ve earned through their service. Sellers should give equal consideration to offers from VA buyers because they are a qualified and growing demographic. Anyone wishing to sell their home should field as many offers as possible and not limit their pool of potential buyers, especially when those decisions are being made based on outdated, incorrect and often anecdotal information.