Ten Reasons We LOVE VA Loans (yes, we said VA).
There are unfounded rumors swirling around the real estate community regarding VA loans: they are difficult to underwrite, appraisals come in undervalue and the turn times are unreasonable. That is so 2007.
Originating a home loan for our Veterans is an honor, in any market. But not long ago VA loans got a bad rap and sellers were hesitant to accept VA offers.
What’s changed over the past couple of years with VA loans? Are you ready? Very little. VA loans today have a default rate of less than 4%, compared to 10% on other programs. It is the real estate/lending market that has evolved (or regressed depending on who you are talking to).
The following are the top ten reasons we love VA loans:
- It is an honor to originate loans for our Veterans.
- Typically, banks will allow lower credit scores, 620 is the norm.
- Lending after a conventional or FHA foreclosure is two years. If it was a VA foreclosure, and the new home financed is over $144,001, VA may allow the veteran another VA loan (No, it doesn’t make sense). Foreclosed VA loans stay on the Veteran’s record forever. But this “bonus eligibility” has helped many Veterans to reenter the housing market and reuse their VA.
- Ratios are not considered. VA calculates residual income. But the banks may implement their own ratios. Ratios as high as 63% have been approved.
- VA will accept rental agreements on current homes if the buyer is moving up. Check with the lender to verify any over-lay criteria.
- Short sales are considered a market issue, not the Veteran’s (Direct quote from their West Virginia office). But the Veteran is at the lender’s mercy. And banks’ over-lays trump VA guidelines.
- VA may decrease their upfront funding fees, a direct reflection of the lower default rate.
- VA is truly zero down and the seller can pay up to 4% concessions towards buyers closing costs.
- VA Appraisals are still using their same old system. Appraisers contact agents when there is a value issue and encourage their input. Lenders can call and beg for the updates and quicker turn times.
- It is an honor to originate a home loan for our Veterans.
It is the least we can do.