Have you ever heard that a borrower has VA financing and turned them away? Unfortunately, it happens more o?en than most people think. However, VA financing is much more aBracCve than most people realize, and VA borrowers shouldn’t be turned away.
VA loans help veterans who served our country secure financing. The loan is governmentbacked, so there’s no reason real estate agents and sellers should avoid them. Unfortunately, VA loans are subject to many myths that keep sellers and real estate agents from accepCng them.
If you’re not sure that VA financing is something you want to entertain, here’s everything you should know about it.
5 Reasons Real Estate Agents Should Consider VA Loans
Many people believe unrealisCc myths about VA loans when they can be another avenue to close a sale. Veterans deserve just as much opportunity as other borrowers to buy their dream homes.
Here are five common myths people believe about VA loans that aren’t true. Learning the truth about the loans may help you sell more homes and get the price you want for them.
VA Loan Borrowers aren’t Strapped for Cash
This is the number one myth real estate agents, and sellers believe – VA loan borrowers don’t have enough cash to buy the home.
That’s not usually the case.
VA loans offer 100% financing to help those who served our country secure financing faster, but that doesn’t mean they don’t have the cash. It also doesn’t mean they can’t afford the mortgage. The lack of a down payment requirement helps borrowers, but it doesn’t mean they won’t get approved.
VA loans have much more flexible guidelines making it easier for them to qualify, but they must sCll prove they have the income to afford the loan.
In fact, because VA borrowers don’t need a down payment, they usually have more cash saved for closing costs and home emergencies, making them an even more aBracCve borrowers.
VA Home InspecEons aren’t as Hard as you Think
Most assume the VA home inspecCon makes it impossible for homes to pass, causing sales to fall through.
This isn’t the case.
Like any loan program, the home must be livable. This means no obvious flaws with the home that would make the home unstable or unsanitary. Most of the issues VA inspectors find are simple to fix and don’t cost much.
Veterans are o?en willing to cover the cost, so the burden doesn’t fall on sellers.
VA Appraisals are Like Other Programs’ Appraisals
All programs require an appraisal. The lender must ensure the property is worth at least as much as the borrower offers to pay.
Most people believe VA appraised values come in much lower than other appraisals, but this isn’t always the case.
If the appraised value comes in a liBle low, o?en, VA borrowers are willing to cover the difference. But the VA appraiser’s job is to provide an objecCve value for the home based on the value of recent sales in the area, comparing it to the subject property’s features.
VA Loans Don’t Take Long to Close
Most people believe VA loans take longer to close. But, again, this is another myth people believe about VA loans.
In recent years the VA has amped up its technology, puUng them on pace with the same turnaround Cme as convenConal and FHA loans. SomeCmes, they even close faster, negaCng the myth that VA loans take too long to close.
Sellers aren’t Required to Pay the Closing Costs
Many people mistakenly believe sellers are on the hook for many of a buyer’s closing costs for VA loans.
This isn’t true.
VA borrowers have lower closing costs because the VA restricts what they can be charged, but that doesn’t affect sellers.
Can VA borrowers ask sellers to help with their closing costs?
Absolutely. But they can do the same with any other loan program too.
If a buyer needs seller concessions, they’ll ask during contract negoCaCons. This isn’t directly related to VA financing, though. In other words, the VA doesn’t require that sellers contribute a certain amount to the buyer’s closing costs. It’s by choice; the sale can sCll happen if sellers don’t help.
Benefits of VA Financing
Now that we’ve uncovered the myths about VA loans, here are the benefits of selling to a VA buyer.
More Flexible UnderwriEng
VA loans have the most flexible underwriCng requirements. This means fewer loans fall through a?er signing the contract. Since this is a risk with any type of financing a borrower has, it’s good to know that VA loans have more flexible requirements, increasing the chances of a borrower geUng approved.
More Buying Power
Because VA borrowers don’t need a down payment, they o?en have more buying power. They don’t have to worry about saving 3% – 20% to put down on the home. As long as they have the income and employment to qualify for the loan, they can close much faster.
Larger Buyer Pool
When you leave out VA borrowers from your potenCal buyer pool, you reduce the number of people who can look at and bid on your home. In addiCon, leaving VA borrowers out could mean it takes longer to sell your home, and since VA borrowers have a higher success rate closing on loans, you could be leaving out the wrong borrowers.
Leaving VA borrowers out of the pool of potenCal buyers could hurt sellers. In addiCon, VA loans have come a long way in recent years and are just as compeCCve as FHA and convenConal loans.
The inspecCon or appraisals aren’t anything worse than other loan programs require, and VA loans have more flexible guidelines. This means more borrowers may get approved with VA loans than any other loan program.
Understanding how VA loans work and the benefits of including those borrowers in your potenCal buyer pool can help you sell your home faster.