4 Things Everyone Gets Wrong About VA Loans That Are Costing You Clients

No matter how long I do this, it never ceases to amaze me that most real estate agents don’t really like doing transactions where the buyer needs a VA loan.

And that’s too bad, because VA loans are a wonderful gift to our country’s military. And, there’s a TON of clients you might be missing out on.

Check these facts:

  • There are 22 million+ eligible US Veterans
  • Less than 2 million of them currently have a VA Home Loan
  • That’s less than 10% usage nationwide, with some states as low as 3%

How’s 20 million potential sales sound for 2020 opportunity? Now that I have your attention, let’s start to change this perception by busting my Top 4 VA Loan Myths:

Myth #1 - Veterans Already Understand Their VA Benefits

The numbers I listed above should serve as proof that veterans don’t really understand what’s available to them since less than 10% have a VA loan.

The reason?

Many Veterans report that little information is provided to them about the VA Home Loan Guarantee program during their active duty time.

Check out this list of common misconceptions we have heard directly from our clients:

  • I was never told about my VA benefit
  • I thought my eligibility was expired
  • I didn’t pick up my certificate so I didn’t think I could use my VA Loan
  • I used my eligibility once so didn’t think I could use it again
  • I used my eligibility once so didn’t think I could use it again
  • It is only for military on active duty and I got out after four years
  • It is only for Veterans and I am still on active duty
  • I have VA entitlement, so I automatically qualify for a VA loan

The moral of the story is to make sure your potential clients have the FACTS about their eligibility.

Myth #2 - VA Loans Take Too Long To Close

This one comes more from real estate agents than borrowers.

But that doesn’t mean it’s true.

The fact is, most VA loans close in under 20 days!

Because we do so many of them, it takes us no longer to close a VA loan than it does a conventional loan program, even though there is more paperwork involved.

Myth #3 - VA Loans Create Appraisal Issues

Everyone assumes that VA appraisers will low ball their property and nit-pick the condition of the property.

Statistically speaking, this one isn’t true either.

Less than 1% of VA appraisals come in low.

Yes, VA appraisers have to do more work if the value is low, and the minimum property requirements of VA are very reasonable items any buyer would want corrected.

But ironically, the VA appraisal system now has more accountability than the Conventional side does.

***Do You Know About The VA Tidewater Rule?***

MYTH BUSTER!

If the value is likely to come in below the purchase price, VA has actually added a step in the process to ensure the appraisal is as accurate as possible. The extra step allows the agents in the process an opportunity to provide additional information before the appraisal is finalized.

Contact me for more info on this!

Myth #4 - VA Loans Have Higher Closing Costs

We hear this one more often from the sellers.

And again, NOT true.

The misperception is that a VA loan will cost more because of VA rules on fees the buyer is allowed to pay. The assumption is that there are fees which will automatically be moved to the seller.

The fact is, the buyer is often allowed to cover all the fees being charged and if they can’t, then someone like the lender or agent can cover any non-allowed fees.

Keep in mind that VA loan fees can always be negotiated which creates a much larger potential buyer pool for every home.

Here’s a quick test to see if a Veteran may benefit from a VA loan.

  1. Do they have a down payment you want to use?
  2. Do they have any hiccups on your credit?
  3. Are they a disabled vet?
  4. Are they getting a loan over the county limit?

If they answer NO to all 4, a VA loan may not be their best choice.

If even one answer is a YES, make sure you talk to a mortgage professional who understands VA loans.

It is imperative that a mortgage loan originator understand what overlays their bank mandates to be able to guide a Veteran and maximize their benefit if some internal overlay is artificially holding the Veteran back.

That’s why we take our education so seriously. I am certified by the National Association of Mortgage Brokers as a Veterans Loan Specialists. That certification is really for our clients - to create trust and help ensure each client gets the loan that’s best for them.


* Specific loan program availability and requirements may vary. Please get in touch with the mortgage advisor for more information.