CCAR The Voice of Clark County Real Estate: VA Loans
Posted July 15, 2018 in Special Features
As we celebrate the birth of our nation this month, it is only natural to extend appreciation to the men and women who have served our country. Veterans and their families make numerous sacrifices and dedicate their lives to protecting our freedoms, and to thank them for that service, our government has offered the VA Home Loan Guarantee Program for over 70 years.
Known usually as “VA Loans”, they are actually guarantees that private loan companies take advantage of on behalf of an eligible veteran or their surviving family. Currently, a little over half of Veterans who recently purchased a home with a mortgage utilized VA loan programs, making them an important part of the mortgage lending landscape. To be eligible for the VA loans program, you must provide various documents depending on your service record, whether active duty, reserve, or separated from the military. Once approved, the federal government guarantees part of the loan, making it so the client can take advantage of more favorable terms. According to Kerry Greenwald of Creekside Mortgage, a local company that specializes in VA Loans, a client’s purchasing power when going through VA backed loan generally increases, whether due to lower interest rates, lower down payment requirements, or the elimination of mortgage insurance.
While there are great advantages to the VA Home Loan Guarantee Program, there are also many misconceptions regarding these programs, by both veterans looking to utilize these benefits, as well as sellers considering offers which utilize the VA Loan Program. Some veterans believe that they can only take advantage of the benefits once, which is incorrect. While there are limitations regarding how much of a mortgage guarantee a servicemember or veteran may receive, the program can be used multiple times as long as payment requirements are met and the client is using the home as their primary residence. According to Michelle Redberg of Fairway Mortgage, another lender who specializes in VA loans, many veterans feel that VA loans are hard to get, but often times the program opens up opportunities where there could have been barriers, like a lower credit score or increased debt. Currently, the loan limit for VA backing in our area is $453,100, making it a useful tool for those who qualify in Clark County.
One misconception that is often attached to VA Loans is issues with appraisal. While in the past there had been delays in getting an appraisal completed, in recent years there has been an increase in VA appraisers in the area, and now VA loans are completed at around the same pace as non-VA loans, just depending on the time of year. Additionally, some sellers believe that since many clients using the program don’t have a down payment attached to the loan, the offer could be less secure and therefore a risk for them to accept. This is a misconception, as the reason for the little or zero down payment is that it is a specific benefit of the program, and is in fact a strong overall loan given its backing by the U.S. government. Therefore, sellers should feel confident if they choose to proceed with an offer associated with a VA Loan, even if it happens to have no down payment requirement for the buyer.
With increased buying power, lower costs, and financial security associated with the VA Loan Program, both buyers and sellers should feel confident trusting this long-established program. If you are a veteran or active servicemember who is looking for a home, it would be to your advantage to consider this benefit that the federal government has made available for over 70 years. For more information, contact an experienced VA lender or a local REALTOR.
Public Affairs Director
Clark County Association of REALTORS®