Rebecca Richardson - Mortgage Consultant
VA Loans: What They Are & How They Can Help You Buy a Home
As a lender, VA loans are one of my favorites and one of the first ones I learned. However, a lot of the time these buyers get pushed aside.
In this article, we’re going to go over the basics of a VA loan and common misconceptions that can overwhelm many borrowers.
One common misconception about VA loans deals with appraisals. Specifically, whether or not they take longer for a VA loan.
A VA loan is the only loan program that actually has a mandated turnaround time, unlike the appraisals for other types of loans. So they have 10 days. That’s the amount of time they get to give us the appraisal back and as far as them taking longer to close, 30 days is pretty standard. And 28 days is the national average.
Another misconception, that can be upsetting to hear as a lender, is that because it's a 100% loan, they don't have skin in the game. Which is completely false.
Statistically speaking, 28% of veterans who don't have to put a down payment down do so just because they can or want to in order to lower their payment or in order to win a bid.
I currently have at least one veteran that's putting down additional funds just because that's the house that he wants to buy.
And let’s remember that the veterans earn this benefit. That's their skin in the game. They gave service to their country.
The third misconception is that a VA buyer is going to actually cost the seller money.
Which is not true. The only time that's applicable is if a lender is charging a 1% origination fee. Past that if the lender isn't, there are no fees the seller is required to pay for a VA loan.
Now, we can dive into the positives and perks that come with a VA loan.
One of those is that you can actually buy a multi-family home, meaning a two to four unit property, with a VA loan. That opens up the possibility for generating additional rental income as the veteran is living in that property.
There’s also no down payment needed in order to do so. The veteran can use the rental income from the other units, occupy one of the units and then leave that and use his VA loan again to do the same thing at least one more time.
Secondly, you can actually have two VA loans at the same time.
(Technically, you can manage up to 3 depending on where you’re buying.)
But yes, it’s based on the amount of entitlement the VA awards which is a very complicated math structure that nuts and bolts it down to these are the number of houses you can buy.
These often are based on the PSC seasons for veteran families while they’re active on duty so they're not put in a position where they have to sell a home if they don't have the equity to do so.
Essentially, you can have more than one VA loan at a time. You can sell a home and then use your VA benefits over and over and over again. It’s essentially a piggy bank where once you've taken everything out of the piggy bank, you can't use it anymore until your piggy bank is full again.
But once you sell the house, it refills your piggy bank so you can continuously reuse it.
My favorite one for veterans is that the documentation needed to do a VA loan is actually pretty minimal. If you're 100% total and permanently disabled, we only need your certificate of eligibility, two forms of I.D. and two bank statements to get you preapproved to buy a home. Then we can get your Certificate of Eligibility.
I hope that this article helped you clear up these common VA loan misconceptions because it’s important for the real estate community and veterans alike to understand the benefits and how these are great loans to help grow our community.
Interested in learning more? You can contact me by emailing (firstname.lastname@example.org) or finding me on Instagram (@the.mortgage.mentor).