Buying a home with a VA Loan

Buying a home with a VA Loan

 

Buying a home with a VA Loan (Veterans Administration) is one of the better loan programs out there.  You will have to have your VA certificate to prove your qualification for this program.

A VA loan is handled by any number of lenders and bankers that have that ability.  They will have the most accurate information regarding the rates, policies, and how much of a home you can qualify for – based upon your income – and can help you with your certificate information.

We have a list of recommended lenders that we know will do an excellent job for you.

(Note that WE are NOT a VA lender – any information stated here needs to be confirmed with your mortgage professional)

VA Loan AdvantagesCouple moving boxes into new home

No Downpayment

You can borrow the entire amount of the purchase price for your home (100% financing)

No Private Mortgage Insurance  (this is insurance other lending programs tack on the payment to cover their loss if a borrower defaults.  In cases such as an FHA loan, this is a substantial increase in monthly payment)

Some eligibility requirements could be more relaxed than other loan options

Make sure you speak with your lender not only about the interest rate, but also the closing costs.  Some national lenders may have excessive fees and extra charges that a local lender does not.  They may offer a lower interest rate, but make sure you compare fees and closing costs as well.

 

Property Condition

One point about the VA Loan you need to be aware of is property condition.

VA figures that if they are going to lend you money to buy a home, it had better well be in good shape.

They require the home to be safe, sound, and weathertight.

Peeling paint on the exterior, missing or curled shingles, cracked glass, missing screens and downspouts will all be required repairs that will need to be completed and checked before any closing happens.

Safety items such as non-existent electrical covers, exposed wires, and missing stair rails are included in this as well.

The problem with these condition requirements exists primarily in the lower price point homes and bank owned/foreclosure properties.

If a homeowner/seller is unable to make the repairs necessary to pass VA inspections, purchasing that home may be difficult.

I also wouldn’t expect many bank owned properties to be VA financeable either.  Banks will not make any repairs to the property and forbid potential buyers from making repairs…so many properties are simply left for cash and conventional loan buyers.

The “VA inspection” I referred to is actually done by the appraiser hired by the lender to assess the property value.  He also will confirm the property condition for the VA.

It is completely different than the home inspection, which is for YOU and YOUR INFORMATION.  The VA appraiser simply confirms the x’s have been checked on the VA’s required conditions.

See my article on Home Inspection vs Appraisal.

 

Money SurfingCall and Compare VA Loans

As with any loan, I highly recommend you do a bit of shopping around for the mortgage professional that you feel comfortable with.

Note that there are more things at play than just money and rates.  I always encourage a local lender:

  1. They know the local programs
  2. They have relationships with the title companies where we close
  3. They can usually close quicker
  4. I know where they work and can get in front of them if necessary.  Nothing is worse than trying to get to closing with a 1-800 number, a voice mail, and a promise to call back….and then they never do.

 

Questions?

We are happy to talk with you about the ins and outs of buying a home.  We have helped numerous military families in different stages of PCS – and would be happy to visit with you.

Call us at 605-593-9367.  Or if you are in town, schedule a visit over coffee with us.