VA loans rank as one of the best benefits offered to the military. Providing 100% financing for home purchases and refinances, VA loans also offer flexible guidelines for its borrowers. However, even with all of the benefits, VA loans are often overlooked for financing because of the misconceptions surrounding them. These loans are not difficult to understand and should be embraced as one of the top loans available today to a wide variety of people. To change the outlook that many people have on this type of mortgage, here are the top 10 misconceptions and facts regarding VA loans:
Misconception #1 – VA loans can take too long to process
Fact: VA loans normally take the same amount of time to process as any other mortgage. Processing a VA loan is the same except for the use of the VA portal which is accessed online. However, this is used just to input information to the VA system so that a VA appraiser can be appointed. It is very similar to the system requirements for FHA loans.
Misconception #2 – VA loans are more expensive than conventional loans
Fact: VA loans are not more expensive than conventional loans. In fact, for the borrower, VA loans offer 100% financing which means no down payment. While paying an VA funding fee may appear to be more expensive, this fee is a one time charge that can be added to the loan amount. VA loans do not have monthly mortgage insurance ever and interest rates can be an eighth to a quarter percent or better than other loan programs. With a conventional loan, there is a down payment requirement and often mortgage insurance that must be paid for several years.
Misconception #3 – VA appraisers are demanding
Fact: The real fact is that VA appraisers are not demanding, but must perform the appraisal as VA requires it to be done, according to the Minimum Property Requirement. As a protection to the borrower, a VA loan requires that the property be in a certain condition so that the borrower is indeed purchasing a home that is safe, structurally sound and sanitary. VA does not want servicemembers to end up purchasing a home that requires multiple repairs and more money to be put out by the borrower. VA appraisers are regular appraisers who inspect for other types of loan programs, just that they are licensed and certified by the VA.
Misconception #4 – VA borrowers are not well qualified
Fact: Due to the fact that VA borrowers receive 100% financing even with credit blemishes, many think that VA borrowers are not well qualified. This is a myth because VA loans are a benefit offered to make it easier for these borrowers to become homeowners. In many cases, VA borrowers often qualify for conventional loans, however, the perks offered with VA loansmakes them much more attractive. VA loans have the lowest foreclosure rate of any loan program available today.
Misconception #5 – VA loans can only be used one time
Fact: VA loans can be used more than once. In fact, veterans can use their benefits multiple times as long as they have remaining entitlement available.
Misconception #6 – VA loans cannot be used on rental properties
Fact: The truth is that VA loans can be used to refinance a rental property as long as the servicemember certifies that the residence was previously occupied as the primary home. This means if a servicemember once occupied the property and there still is a VA loan on that property, they can refinance that loan using the VA IRRL program into another VA loan.
Misconception #7 – A servicemember cannot have 2 VA loans at one time
Fact: Veterans can actually have 2 VA loans at one time. This can often happen when the VA homeowner must relocate and wants to keep their original residence as a rental. Veterans who have sufficient remaining entitlement may obtain a second VA loan to purchase another home.
Misconception #8 – VA loans are only for a home purchase
Fact: The VA loan program offers an excellent refinance mortgage for existing VA loans. In fact, there can be no appraisal or credit underwriting required with the VA IRRRL. In addition, the VA IRRRL can be used for a rental property. VA Cashout refinances can also be used to pull equity out of the home, or for converting another loan program into a VA Loan.
Misconception #9 – VA loans are only available for retired or disabled veterans
Fact: The truth is that, in addition to retired or disabled veterans, VA loans are available for active service duty members. Members of the National Guard or Reserves are also eligible after 6 years of honorable service. Further, many spouses and widows are entitled to enjoy the benefits of a VA loan.
Misconception #10 – Veterans don’t qualify for a VA loan after bankruptcy
Fact: This is a another myth since VA loans are consumer friendly and have easier credit qualifications than conventional loans. Borrowers can obtain VA loans post bankruptcy after 2 years. However, under certain circumstances and according to VA guidelines, a VA loan is possible after 12 months from the bankruptcy.
With so many misunderstandings regarding VA loans, this type of financing is often overlooked in favor of conventional loans. Many lenders may not want to take an application for a VA loan because they are not familiar with doing so. Home buyers who are eligible for VA loans should seek the assistance of a knowledgeable and reliable VA lenderwho fully understands the benefits and procedures for this type of loan.
For any additional information on facts about VA loans, feel free to contact us at 888-913-5531 or firstname.lastname@example.org
My loan process was very easy and quick. Not to mention a great loan rate. I couldn't be happier!
Capt Sam T. - US Army
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