You may have heard that VA mortgage loans, are a good option for military members and veterans, but maybe you really don’t know much more about them or how they work. VA home loans, VA standing for Veterans Affairs, are government-backed and offer a number of benefits that standard mortgages do not. If you are a military member, eligible surviving spouse or veteran (or you know someone who is), please look into this benefit if homebuying is on the horizon.
Common Benefits of VA Home Loans
As a mortgage lender for over 20 years, I get a lot of questions about VA home loans:
- “Is there really no down payment required?”
- “Is there no PMI (private mortgage insurance)?”
- “Can I use my VA benefit more than once?”
- “Are the VA rates better than conventional loan rates?”
- “Can the seller help cover closing costs?”
The answer to all of these questions is: Yes, although eligibility and loan terms can vary. The VA allows for no money down, and the VA guarantees the loan instead of an insurance company. I can’t speak for all lenders, but here at Service Credit Union, we offer fixed interest rates for VA home loans that are lower than those of comparable fixed rate conventional loans. Keep in mind, VA home loans do carry a funding fee in place of PMI, though it can typically be rolled into the loan, and some borrowers are exempt. And if you negotiate fees with the seller before signing any contract, you could walk away with little to no money out of pocket for closing costs. Sellers may be able to cover some or all allowable closing costs, depending on the loan terms and negotiated agreement.
You may have also heard some negativity around VA home loans, but these are an opportunity for education. Here are some common misconceptions.
- “I heard VA loans take longer to process than conventional loans.”
- “VA loan appraisals take longer and have a more stringent appraisal process.”
- “Is it true VA loans have additional inspections required?”
Processing Times and Appraisals
In today’s market, I have not seen VA home loans or VA appraisals take longer than other types of mortgage loans. VA loans do require the property to be reviewed by a certified VA appraiser, but that does not necessarily mean the process will be slower.
VA appraisers evaluate market value and whether the property meets VA minimum property requirements for safety, soundness, and sanitation. In my experience, all appraisers, regardless of certification, will point out potential areas of concern. That added review can be valuable for any homebuyer because it helps you better understand the property you are purchasing.
Unless you are buying in a rural area with a limited number of VA appraisers, I have not seen the VA appraisal process take longer than a conventional appraisal.
Depending on the property and location, the VA may require a wood-destroying insect inspection. Properties with an individual water supply, such as a private well, must also meet applicable water-quality requirements.
VA home loans may have once been a cumbersome process, but here at Service Credit Union they have been streamlined to close in 30 days just like any other conventional mortgage loan. What I have seen is that typically the VA home buyer closes with no money down, sometimes no closing costs or little out of pocket, closing in the same time frame as a conventional loan, AND at a much better rate! And one additional bonus is, once you have a VA home loan, it is much easier to modify your interest rate in the future if rates go down without the full refinance fees.
If any of this sounds interesting to you, please consider attending our quarterly VA homebuying webinars to learn more.
