Dismiss the VA Loan Myths

Common misunderstandings about VA loans do exist, yet many of them can be dispelled. A closer look at five VA home loan myths can help borrowers see that the federally-backed, zero down loan program is hard to beat.

Myth: VA loans can’t be used to purchase short-sale or foreclosed real estate.

Fact: VA home loans can be a great way to provide zero-down financing for short-sale and foreclosed properties. They can even give those who are VA eligible a slight edge over conventional borrowers who need to come up with a sizable down payment. As long as the distressed property passes the VA appraisal for value and safety, a federally-backed VA mortgage is a perfectly acceptable means of financing a home purchase.

Myth: Surviving spouses can’t get VA mortgages.

Fact: Spouses who survive a military member killed on duty or as a result of a duty-related injury may likely be entitled to VA home loan benefits similar to those received by veterans and active duty military personnel. Many surviving spouses may not know about their VA home loan benefits. Qualified surviving spouses may borrow up to $417,000 (more in high-cost counties) with as little as no money down. What’s more, surviving spouses are exempt from paying the VA funding fee. The waiver can save several thousand dollars upfront.

Myth: Military members serving overseas have to return home to get a VA-guaranteed loan.

Fact: Military members overseas, who want a VA loan but can’t make it home due to service, can designate a spouse or other person to act as Power of Attorney. The VA will allow a veteran to use an attorney-in-fact to execute any document necessary to obtain a VA loan. Lender procedures may vary. Regarding the occupancy rule for properties financed with VA loans, the Department is very lenient with VA borrowers serving overseas. A spouse can satisfy the occupancy rule. Or, whether the military member is married or not, he or she may have up to a year or longer to occupy the home financed with a VA mortgage as long as a return is planned with intent to occupy.

Myth: All realtors understand the VA home loan process.

Fact: Realtors® are licensed to sell properties, not finance them. Certainly, there is no VA certification for real estate brokers. Relying on a real estate broker for information about how the VA loan process works can often result in misinformation. Realtors® who are uninformed may even discourage a VA-eligible borrower from using a program that may be the best financing option available to them. The most accurate information about VA mortgages may come from VA specialty lenders, whose majority product is military home loans. These lenders have experience in handling special circumstances that can sometimes delay or even prevent less experienced lenders from processing VA mortgages.

Myth: VA loans take longer to close.

Fact: It’s a common misconception that VA loans take longer to process because the VA guarantees every loan. However, VA lenders are given flexibility to determine whether a borrower is a satisfactory credit risk base on a specific set of guidelines. Rarely does an extenuating circumstance require a second nod from the VA itself. If a lender is particularly specialized in VA home loans, then many can close within 30 days.

For more information about the myths and facts of VA-backed mortgages, contact a lending professional.