There are a number of rumors about VA loans that have persisted despite all evidence to the contrary. Unfortunately, some are turned off to the VA home loan program as a result, having never questioned them and performed a little research to find the truth. Fortunately, you are here and obviously do not fall into that group. So let’s debunk a few myths about VA mortgages!
I’ve already used my VA home loan benefit.
In most cases, the VA home loan entitlement is restored when you pay off your VA loan, meaning you can use it over and over. There are some restrictions and a caveat or two. Most notably, unless the VA determines that you have an eligible service-connected disability, you will be required to pay a higher funding fee on your subsequent uses of your VA entitlement. As with the first time around, however, you can finance it into the loan.
In addition, the status of the previous loan may limit how much you can borrow on the new loan or, in some cases, prohibit you from using a VA loan again. If you currently own a home with a VA loan, or if you have previously defaulted on a VA home loan, you may only use whatever remaining entitlement you have currently available.
Sellers don’t like VA loans because they take a long time to close.
This rumor is at least somewhat rooted in fact. It was not uncommon for VA loans to take longer than other types of loans…10 or 15 years ago. That has not been the case for some time. The VA, in an effort to protect veterans, has traditionally demanded far more oversight over the appraisal process than is required with other programs. While this used to demand more time, advances in technology made the process much more efficient.
VA loans are risky.
Some might equate “no down payment” with a higher risk loan. There are risks to not putting any money down, of course, but according to the Veterans Administration, the VA loan program has consistently carried very low foreclosure rates compared to other programs. There are several reasons for this, including proactive foreclosure avoidance programs, the residual income requirement, and the lower monthly payment the program affords veteran homebuyers.
If you would like to learn more about the VA loan program and your entitlement, do not hesitate to contact me. I strive to give my customers the information they need to make informed decisions and achieve their goals.