"I was in the army so I am guaranteed a home loan by the VA" - WRONG

This is a common misconception about VA guaranteed loans and something we come across often in the Fort Hood area.  While it is true that the VA Guaranteed loan is a benefit available to active-duty military and military veteran buyers; the guaranty is to the lender, not to the veteran buyer, and qualifying for the loan, though much less stringent, is still required.

 The VA Guaranteed loan program was created as part of the GI Bill of Rights in 1944.  The idea was to make housing easily available to servicemen returning home from World War II.  The largest benefit to the Veteran buyer was the ability to buy a home with no money down.  This program has made, and continues to make, the dream of home ownership a reality for millions of Americans.  

 So, how is the loan "guaranteed"?  Basically, the VA has set certain guidelines with regard to the buyers credit worthiness, debt to income ratio, and the value and livability of the house.  If these guidelines are met the VA will guaranty the lender that if the borrower defaults on the loan, the VA will make good on the loan up to 25% of the loan amount (up to $104,250), which allows a veteran buyer to purchase a house up to $417,000 in value.  The guaranty replaces the protection the lender normally would receive by requiring a down payment.

 Another misconception is that the government makes VA Guaranteed loans.  VA Guaranteed loans are made to eligible veterans by private lenders for the purchase of a home.  The veteran buyer must meet the guidelines set forth by the VA Guaranteed loan program and buy the home with the intention of occupying it as his or her primary residence.

 "I can't buy a house because my credit's not the best" - WRONG

OK, we're still on VA loans, here.  We're not talking about "funky" loans that are mostly unavailable now and not good for anyone but the originator who sold them.  The fact is that in order to purchase a home with a VA Guaranteed loan, there must be an indication that the borrower pays his bills, but it is mostly limited to the prior 12 months.  If there is a bankruptcy the borrower must wait 2 years (Chapter 7) and there must be no late payments or derogatory credit since the bankruptcy.  If there are minor charge offs or collections, they may not be counted against the borrower or they may be required to be paid off or settled before approval is given.  Any judgment must be paid off or settled.  Any federal debt (tax liens, student loans, etc.) that is in default must be brought to good standing.

 "I don't have any credit history so I would not qualify" - WRONG

  Again, speaking strictly of a VA Guaranteed loan, the borrower may use alternate credit to develop a positive credit history.  Alternate credit history can include rent, utilities, cell phone, insurance, etc.  Pretty much anything that is paid monthly and shows a 12-month pattern of on time payments.

 As you read this you may think it is being written by a mortgage lender - WRONG 

I am a Realtor® in the Killeen-Fort Hood, Texas area and a very large majority of the business I do is with military buyers using VA Guaranteed loans.  Why then would I choose to write about a mortgage product?  It's simple, really.  I've worked with everyone from active duty PFCs to Majors, retired Sergeant Majors to Colonels, and those who have done their 4, 6, or 8 years and have left the service to pursue careers in the civilian world and one thing they all have in common is that they have served this country faithfully and now I consider it my duty to do the same for them.  Sure, I could refer the questions over to my preferred lender, but if I'm putting myself out there as the real estate professional, then I had better darn well be able to make them secure in my knowledge of every facet of the market and the transaction.  Am I saying that you should know everything about everything?  No, of course not.  That's why we surround ourselves with a team of professionals.  It is not, however, too much for a client to expect that when you are guiding them through what may be the largest decision they have ever made, you have the experience and ability to answer basic questions about concepts you deal with daily.

 Now, are you ready for the truth?  Are you the well-rounded, super informed real estate professional in your area?  Are you the expert at what you do daily?  If you are not, are you truly serving the client's best interest?  Either you're doing it RIGHT or you're doing it WRONG.

Richard W. Overall. Jr  REALTOR  Casa Realty, Killeen, TX

www.OverallRealtor.com