With the influx of new military coming home from tours of duty as well as existing generations also looking to take advantage of real estate markets, the VA home loan has shot up in popularity in the last few years, especially for first-time home buyers. Many are looking to settle down after years of military duty overseas as well as to make sure they have a piece of the real estate market before getting priced out. Both have created significant demand for home financing, and the VA home loan is one of the biggest benefits of having a military background when it comes to homebuying. However, the process is not a simple walk in the park.
The first issue is homebuying rules vary from state to state. While the VA home loan financing program is administered per federal rules, the buying process itself can vary significantly. That can create surprises for folks from out of town looking to now settle down in the state where they were last stationed. This is where a good local realtor makes a big difference in helping out a client not familiar with local requirements.
Second, the VA home loan process doesn’t always cater to a fast market. While people may want a commitment and deposit within a day, the loan process itself can take up to two weeks, oftentimes waiting for necessary appraisals to be completed. On average, authorization has taken up to 14.8 days before a VA loan can be committed and executed. This frequently causes issues in hot markets when homes go in less that 48 hours. Folks oftentimes have to be ready to risk sizable, nonrefundable deposits to hold onto homes until a loan comes through. And if it doesn’t, the deposit is at risk.
Third, prospective buyers still have to maintain and present a good credit picture. While the veteran status helps with eligibility for the loan, borrowers still need to have proof of sufficient income, credit worthiness and the ability to repay the loan. The biggest benefit of the VA home loan is the fact that it can be approved without a down payment.
Fourth, restrictions on VA loans tend to work against veteran buyers because not all real estate agents want to work with the program when a hot market could offer higher fees with a non-veteran loan purchase. So, it is critical for veterans to work with an agent who specifically focuses on VA loan purchases and is committed to the program and its clients.
There are lots of programs that say they support VA Home Loans, but it’s important to work with an experienced and certified VA homebuying agent who can help folks navigate both the purchase and VA home loan as well. That kind of guidance is worth its weight in gold, avoiding the pitfalls that oftentimes frustrate folks at the last moment.
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