Don’t Believe These 5 Myths About VA Loans
There have been some issues popping up lately when it comes to VA loans. Specifically, I want to address some of the myths that are out there among consumers and agents that are keeping our nation’s heroes out of the housing market.
Before we get into those myths, I want to quickly mention the Homes for Heroes program. It’s a program designed to help not only our military heroes, but also our first responders, healthcare professionals, and teachers during their real estate transactions. Check out PA-Heroes.com to learn more.
"There is no mortgage insurance with a VA loan."
VA loans are loans for active service military members and veterans. They require no down payment and have looser requirements for credit scores compared to conventional loans. This means that these heroes could qualify for competitive rates that they wouldn’t get with traditional mortgages. These zero-down loans are subsidized by the VA, so they aren’t subject to the vagaries of congress like USDA loans. There is also no mortgage insurance with a VA loan. There is an upfront funding fee, but even that can be waived if you have a service-related disability or rolled into your loan if you don’t.
Now let’s take a look at these myths and the actual truths behind them:
1. Getting certified for a VA loan is a pain. While that was true in times past, this is the 21st century. Veterans no longer have to send a paper letter to the VA. Today’s lenders have an app for that.
2. VA inspections and appraisal take too long. These have been streamlined and modernized in recent years. VA loans typically close in just 55 days, just a day longer than the average FHA loan. They take slightly longer because the pool of VA appraisers is a bit shallower.
3. Only cash or conventional loans make for competitive offers. Cash will always be king, but veterans may want to consider getting pre-approved for both conventional and VA loans to signal you’re creditworthy and serious.
4. The savings provided by VA loans aren’t significant in the long run. That just isn’t true. VA loans typically run a half point below conventional rates, and there is no monthly mortgage insurance. This frees up a lot of cash each month.
5. Veterans are more likely to default. According to the Director of Education at Veterans United Home Loans, VA loans have the lowest foreclosure rates for most of the past 12 years.
If you're active or retired in the military, talk to your lender about VA loans. If you have any questions about VA loans, how they work, or anything else related to real estate, don’t hesitate to reach out via phone or email. I look forward to hearing from you soon.