I have had the privilege of working with many US Veterans over the years. I am thrilled to see more and more vets getting comfortable utilizing their VA loan benefits, and that number will continue to grow as more of our vets retire and return home.
However, a borrower with a VA loan is accompanied with a number of myths that have plagued the real estate industry for year. Time and time again I have worked through misconceptions regarding VA loans, educating vets, as well as urging other agents and sellers to recognize the benefits of a VA loan and buyer.
MYTH: “No-down payment makes a VA loan risky for lenders and sellers.”
This is one of the most common myths in the industry. I am astonished how many real estate agents still use this as an excuse. VA loans are consistently the safest loans on the market. Despite its No-Down Payment benefit, VA loans have the LOWEST foreclosure rate of any type of mortgage!
In fact, VA loans have the HIGHEST closing ratio nationally of any type of loan, with a success rate of more than 70% for 2014. Conventional loans averaged about 67%, and FHA loans about 63%.
MYTH: “VA loans take too long to close.”
There’s a myth that VA loans have to go through a lengthy underwriting process with lots of government involvement. That’s just not true.
VA loans are underwritten by lenders, not the VA. They are underwritten through the same automated system and the same underwriters as any other loan program.
Their average closing time-frame is the same as other loans, with a national average of 44-days or less.
MYTH: “You have to have good credit to get approved.”
I hear this comment from buyers all the time. A previous real estate agent or mortgage broker has told them they need a certain minimum score in order to obtain a VA loan.
The VA does NOT have a minimum credit score requirement. If there is a score requirement, it is an individual lender that has established one for its own underwriting process. However, there are many VA lenders on the market, and each bank’s criteria will vary slightly.
Many lenders utilize a 620 minimum score, and some higher. However, there are lenders that will utilize lower scores or will ignore scores all together when reviewing a borrower’s credit history.
The Veterans Administration wants to get our vets into good homes. A buyer with a VA loan approval is a solid borrower that should receive the same consideration as any other financed buyer.
I am honored, as are all my colleagues at Chane Realty, to be well versed in the VA loan and home purchasing process. We have worked with hundreds of vets, agents, and sellers to educate and guide them through the home buying process.