Strategies for Veterans Buying Your First Home Using Your VA Loan

In many areas of the country, real estate markets have experienced a shortage of inventory, especially in major metropolitan areas. The seller, in many cases, will have several competing offers to choose from, plus it can be difficult for the seasoned buyer to find a homeowner who will accept an offer with VA financing. Based on past issues from seasoned buyers, several strategies will be outlined on how to make the VA’s offering competitive with other types of financing, such as the traditional or FHA offering. You may want to discuss your options with your loan officer in order to increase your chances of your offer being accepted.

There are usually 5 major areas of concern:

1) Closing costs

2) Misunderstanding of mandatory fees

3) VA appraisal vs. traditional appraisal or FHA appraisal

4) An offer with more money seems more attractive to the seller

5) The VA show requires termite removal

These five issues will be described in more detail in this article. Understanding these five common areas of misunderstanding is likely to increase your chances of getting an acceptable offer.

Many veterans need help with their closing costs. In a seller’s market, instead of asking the seller to help pay the closing costs, you would have to get your lender to increase your interest rate, and ask the lender for credit to cover the closing costs. Regarding additional fees, many agents misunderstand that the seller will be responsible for the mandatory fees.

This set of fees includes: escrow, processing and underwriting. VA guidelines state that this fee is the seller’s responsibility when the lender charges a fee for originating a single-point loan, (which is rare in today’s lending environment).

This concern must be addressed, so that all parties have an accurate understanding of the VA Guidelines. The VA assessment is generally seen as more rigorous than the traditional assessment or the FHA assessment. The most important misinterpretation is that a VA appraiser may order more repairs on the subject property. In today’s world of lending, due to stricter federal guidelines, ratings for conventional, FHA, or FHA loans all use similar criteria.

Many sellers think that a traditional offer with a 20% down payment sounds like a stronger proposition than a no down payment VA loan offer. It is believed that the offer with the highest down payment has the highest probability of closing. If both buyers are pre-approved by an experienced loan officer, and borrower information is pre-approved by Fannie Mae’s underwriting software, Desktop Underwriting, they both have the same probability of closing.

The one area where a VA loan might have a slight drawback is that the VA requires a termite report and clearance, but conventional and FHA loans do not. VA guidelines allow you to pay for repairs, but not the report itself. You can offer to pay for repairs if the report is available and you are aware of the costs. If the repairs are too expensive and the seller chooses to decline the repairs, the house may be what you need to move.

Source by Randy Nathan

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