Well, there's no shortage of something new to learn in this business of real estate. When my buyer informed me that she had already pre-qualified with the VA Vendee program and that she was absolutely certain that was the loan she wanted, I was very leary. What you will read below is what I wish someone had told me straight from the beginning. It was a long and lonely road.
And of course I did what any other agent would do. I googled "VA Vendee." Then, I did what Margaret Woda recommends. I searched AR (or activerained) the term VA Vendee. I found more questions than I did answers. It seems there is little experience with this program. Below are my conclusions--short, sweet and to the point.
- This program existed in the 70s and 80s, went away and is back again.
- You must get pre-qualified through Bank of America.
- You must be purchasing a VA-owned property that is eligible for the VA Vendee program. (I'll talk more about finding those properties in Part 3)
- Any purchaser can apply for Vendee financing. You do not have to be a veteran.
- Vendee Financing is available for owner-occupant and non-owner occupant. (I'll talk about the investor side of the loan in Part 2)
- The rates are extremely competitive. My buyer's rate was below 5%. I can't quote exact rates here.
- There is a 2.25% funding fee you must pay.
- Here is the kicker--NO APPRAISAL is required for underwriting.
That's right. You don't have to worry about an appraisal ruining your deal. And these days, appraisals are of the devil (so to speak). I've heard some very sad stories about how appraisals are ruining deals recently and I'm sure you have, too.
A few more interesting points are listed below:
- No down payment is required.
- The loan amount may be increased up to 2% to finance closing costs, prepaids or other expenses.
- The VA (the seller ) may contribute up to 6% of the contract sales price to pay for the funding fee, closing costs, and pre-paids.
- Vendee mortgages are available in 15-year and 30-year terms.
- Vendee mortgages are assumable.
- Vendee closing was extremely unique. (I'll talk about that in the upcoming Service Link post.)
- Vendee financing is not a credit score driven product. What????
Yeah, that 's right. It's not credit-score driven either. I'm sure there are many factors taken in to consideration, but I didn't find those requirements in my research.
It is a great loan product. However, it is only available through Bank of America.
Click here for the link straight to the VA to verify all that I've written. Call me if you need a little advice. This deal wasn't all roses as you can imagine. Yes, it closed and hindsight is 20/20.