Are VA Loans good or bad--why?

PO3 Matt Schmidt — Wed, 18 Dec 2013 14:41:31 -0500

Their is a negative stigma attached to VA loans and I am not sure it is deserved. What do you think?

Response by LTC Private RallyPoint Member made Dec 18 at 2013 3:03 PM

LTC Private RallyPoint Member — Wed, 18 Dec 2013 15:03:12 -0500

I'm not familiar with a negative stigma to VA loans.  Can you explain?<div><br></div><div>As to whether they're good or bad, it depends on your situation.  We purchased a house at one assignment where the VA loan was not the best option for us and we instead used another loan option.  At a different location, under different circumstances, however, the VA loan was the best option, bar none! </div><div><br></div><div>Anyone taking on a mortgage should do a substantial amount of homework as to various loan options and find a mortgage officer they trust.  Discuss the ins and outs of all the options with the mortgage officer and then choose the one that makes the most sense for your situation.  Don't just take their word for it and don't be afraid to ask for details to aspects of the mortgage you don't understand.</div>

Response by SSG Robert Burns made Dec 18 at 2013 3:21 PM

SSG Robert Burns — Wed, 18 Dec 2013 15:21:51 -0500

All loans are bad except AER, that's why I only pay cash money baby!

Response by SFC Private RallyPoint Member made Dec 19 at 2013 8:27 AM

SFC Private RallyPoint Member — Thu, 19 Dec 2013 08:27:58 -0500

There is no stigma that I know of. Everyone I know of who qualifies for one uses them. Very few of us want to or can afford to put 10-20% down on a home and the VA loan doesn't require it.

Response by SFC William Swartz Jr made Dec 19 at 2013 8:37 AM

SFC William Swartz Jr — Thu, 19 Dec 2013 08:37:05 -0500

Technically it is not an actual loan you are getting from the VA; it is guarantee to the lender that the VA backs the loan, and in almost all cases that I know of, with that backing you do not have to put anything down. We used it to purchase a home when I was stationed at Ft. Knox and was a great tool to allow us to be able to get a pretty good loan and mortgage rate on the loan itself. I have never heard or witnessed any negative perceptions or stigma due to utilizing this tool.

Response by CPT Private RallyPoint Member made Dec 19 at 2013 11:49 AM

CPT Private RallyPoint Member — Thu, 19 Dec 2013 11:49:57 -0500

PO3 Schmidt, I have actually seen some of the negative stigma you are alluding too but it is fairly limited. The area around Ft. Dix, NJ, specifically the real estate agents and related businesses, have a negative view of VA loans because a percentage of military home owners simply walked away from their VA financed home when the BRAC closure was announced rather than attempting to sell, refinance, or rent the property. I am sure that this might be the case around other bases that have been closed. Even though the percentage that did this is probably not large, in an area taking the economic hit that a base closure entails, even a small number of cases would be hard to deal with.

If you do an internet search for "VA REPO", you will find dozens of websites for companies specializing in the resale of VA financed foreclosures. While the foreclosure rates on VA loans are actually lower than most of the other financing programs, I think the 'no money down' causes some new home owners to feel less vested in a property and more likely to walk away while lending institutions and real estate companies are leery of this mentality and more likely to build resentment towards this type of financing.

In the end, purchasing a home is a major financial decision and should be approached with caution. I know that it is a great political slogan to claim 'Every U.S. citizen should be entitled to own their own home' but the reality is, many do not have the finances, stability, and/or discipline necessary to take on this level of responsibility and THAT is why we have many of our VA foreclosures and regional negativity towards VA loans.

Response by SGT(P) Private RallyPoint Member made Dec 19 at 2013 5:59 PM

SGT(P) Private RallyPoint Member — Thu, 19 Dec 2013 17:59:54 -0500

A few months back I tried to purchase a foreclosed property in another
state with the VA loan for investment purpose. The mortgage officer told
me 1. If I purchase the property under the VA loan program I must
occupy it within 30 days 2. I can't use VA loan the purchase foreclosed
property. I didn't get that property under the program.

Response by TSgt Phillip L. made Dec 19 at 2013 6:08 PM

TSgt Phillip L. — Thu, 19 Dec 2013 18:08:44 -0500

I've heard of negative stigma, especially from non-military friendly states (Oregon). From what I've been able to ascertain, it comes from VA's insistence that certain codes be met in the home. Mostly safety related, they're similar to FHA type rules. We're talking about rail spacing, landing dimensions, egress window size, etc. There are a lot of homes out there who don't meet these requirements because either local code doesn't require them, or there are not any local codes. If a seller knows his home is going to have a hard time meeting these requirements, they'll likely pass on the offer.

You can take that however you like, it has some good and bad to it. Likely the same seller who is going to pass on a VA loan guaranteed home buyer, will also pass on an FHA guaranteed home buyer. In a sellers market, you see this more.

Response by CPO Terry Ashmore made Dec 19 at 2013 11:59 PM

CPO Terry Ashmore — Thu, 19 Dec 2013 23:59:06 -0500

Some states have special programs for veterans, such as "Veterans Land Board" in Texas. Read all the small print to make sure you are getting a approved house at and approved mortgage company. So far I have heard nothing bad about VA loans, but make sure the house you are closing won't try to close before 45 days from the contract. Most mortgage companies need 45 days.

Response by 1LT Private RallyPoint Member made Dec 20 at 2013 6:05 PM

1LT Private RallyPoint Member — Fri, 20 Dec 2013 18:05:08 -0500

I am a Federal and State of Florida licensed mortgage loan originator. I have worked as a mortgage lender for nearly twenty years. There are a lot of lenders and real estate professionals who are not familiar with VA mortgages and the VA loan process.

There was a time VA appraisals were scrutinized more intently than Conventional, FHA, and USDA appraisals; now all appraisals are scrutinized. Conventional and FHA appraisals are often conditioned by the underwriters or investor overlays requiring the completion of a review appraisal which is having another certified appraiser reviewing the current appraisal to make sure it was done appropriately. A VA appraisal will require repairs done by someone other than the Veteran.

The mortgage application and processing for the mortgage is very similar to the other types of mortgages except VA has a number of additional forms. We have two VA underwriters on our staff and the conditions on VA loan are not substantially different than those on the other types of loans.

VA loans do require a termite report; a prudent buyer and their professional real estate professionals should have a termite report done regardless with type of loan.

Finally, it is part of my job to educate the Veteran and the real estate professional(both listing and selling brokers) about the VA loan process and establishing realistic time frames and expectations.

James T. Iooss

First Lieutenant

Response by Capt Jason Minnich made Dec 20 at 2013 7:55 PM

Capt Jason Minnich — Fri, 20 Dec 2013 19:55:59 -0500

I try to dabble in real estate by purchasing and renting when I move and the only thing I can conceive as a "stigma" on VA loans is the fact that they allow up to 4% seller payment of closing costs and they are very strict about their appraisal approvals. The listing broker has no right to deny your offer to the seller, and for that matter doesn't need to know what type of financing you have just that you are pre-approved. When I put conditions on house for closing, it's just "contingent on lender approval" and if I really want the house, I point out the areas I KNOW the VA is going to hit and list them as required repairs on close.

For example, There was a house I had purchased and in the negotiations, I said "Paint the eves", the Seller countered with only if a pest inspector requires it, I countered that with "Pest inspector or Lender". The only thing the VA required to be fixed was the eves needed to be painted, The seller was under contract and I held him to painting those eves. Did he not like the VA loan because of that, nope, he didn't like my foresight to put it in the contract, causing him to lose more money on the deal.

It used to be the inspections were harder to pass by the VA and the requirement was the seller HAD to pay for all repairs. However, conventional and FHA are getting just as tough in their appraisal process.

If you feel a listing agent isn't presenting your offers because they are VA, and there isn't a note saying "Cash Only" or something to that affect, call them out. If they respond with "it's too much of a hassle" talk to their boss, every agent is part of an agency, make sure their company knows how that agent is treating military members.

Response by SPC Anthony Smith made Apr 21 at 2014 2:40 PM

SPC Anthony Smith — Mon, 21 Apr 2014 14:40:17 -0400

I
am Loan Officer in Tampa, FL that specializes in VA Loans. I agree with 1LT
Iooss. I would add that many Real Estate Agents hold on to bad stigmas
regarding the VA Loan as well as give out misleading information. I believe it
is by far the best mortgage program available and as such more Military and
Veterans need to be educated on the programs available. I too have taken it
upon myself to reach out to Military and Veterans alike that wish to learn more
about their options under the VA home loan program and make myself available
for any questions they may have regarding their specific situations.

Response by Sgt Adam Lesner made Jul 8 at 2014 4:19 PM

Sgt Adam Lesner — Tue, 08 Jul 2014 16:19:09 -0400

http://youtu.be/8uxOj85sbDI

Veteran Home Loans - Zero Down Mortgage - VA Loans

Use your huge veteran benefit with the veterans home loans. The VA loan is one of the greatest benefits we earn as veterans. More all-American stuff at http:...

Response by MAJ Gregory M. made Aug 4 at 2014 1:28 PM

MAJ Gregory M. — Mon, 04 Aug 2014 13:28:54 -0400

VA loans are great for the buyer (veteran or service-member). However, selling to a VA buyer and using VA for a refinance gave me a different perspective. Because they will often finance 100% of the home value for a new buyer, their appraisal system is designed try to drive down the valuation of the house below market value. Even when you are technically the buyer and the seller (i.e. refinance) expect the appraisal to come in as much as 20% below what you'd find on Zillow, etc. The upfront cost for the VA fee was around $6000 for us, which can be rolled into the loan, but from what I understand you only have to pay that the first time you use a VA loan, and in future home purchases you don't have to pay the fee again. We used WestStar Mortgages which has some veterans running the company and was great to work with on a VA loan, they also paid our VA fee out of a rebate on originating the loan.

Response by SSgt Jason Wood made Aug 7 at 2014 1:26 PM

SSgt Jason Wood — Thu, 07 Aug 2014 13:26:32 -0400

In my opinion the VA loan is the best loan on the market. Compared to its conventional and FHA counterparts it offers equal, and usually lower, interest rates. It will finance up to 100% of the purchase price (up to the county limit), does not have any mortgage insurance (upfront or monthly) plus the consumer protections they built into it are unmatched as well. For example, they do not allow the veteran to pay for the appraisal upfront, they have a residual income calculation that other loans don't which means you won't be married to your mortgage (you'll have money for things like food, gas, power, etc.) and your earnest money deposit is refundable.

As if that wasn't good enough, the VA loan is the best jumbo loan out there too. It only requires you to pay 25% of the difference between the county limit and your purchase price as a down payment. Oh, and the interest rates on these are some of the best you'll find.

Lastly, once you have your VA loan you have the best refinance options on the market too with the VA Interest Rate Reduction Refinance Loan (streamline). Even the VA adjustable rate mortgages have additional protections built into them that other loans do not.

The VA loan is all about protecting the consumer and offering the best to our veterans and those currently serving. People get hung up on the appraisal which isn't even an issue if you're realtor knows what they're doing and shows you homes in good shape. All the rhetoric and bad stigma is from 10+ years ago and has no relevance today. These loans close as fast if not faster than all the others too; well, as long as your dealing with a loan officer that knows them well and not just the big insurance company or credit union...

Response by LTC Paul Heinlein made Aug 16 at 2014 5:09 PM

LTC Paul Heinlein — Sat, 16 Aug 2014 17:09:34 -0400

VA Loans are great if you do not have the money for a 20% down payment or if you do not want to pay Mortgage Insurance.

VA Loans have a fee attached, so if you have the money for the Down Payment I would go with a conventional loan.

If you have a VA rated disability, the VA waives the VA Loan fee so it becomes an option vice the 20% Down Payment for those that meet that criteria.

I have only used VA Loans in areas around Military Bases, so I'm not familiar with any Negative Stigma.

Response by SGT Adam Swanson made May 2 at 2019 10:15 AM

SGT Adam Swanson — Thu, 02 May 2019 10:15:29 -0400

Having been a loan officer for many years, I can assure you VA loans are great. There’s circumstances in which you want to avoid a VA loan. For example, the VA charges a very aggressive fee if you do not receive VA disability (rated 10 or greater). The user will incur this fee EVERY TIME they use a VA loan, whether that’s on a purchase or refinance. In some cases, it’ll make more sense to use a conventional loan. However, the VA will allow for 100% cash out (assuming your home doesn’t have any major damage, peeling paint, roof/leaking issues), no money down when purchasing, and the VA streamline option is great to ensure you always have the lowest rate.

Response by SPC Anna Larson made May 3 at 2019 12:19 AM

SPC Anna Larson — Fri, 03 May 2019 00:19:44 -0400

When my house burned down 5 years ago the month after we paid off our mortgage, we looked into a VA loan. In the long run, it would have cost is more money and more time to replace our house because of extra requirements. In addition, because we had excellent credit, we got a lower interest rate on an outside loan than with a va loan. Basically my understanding is that the Va loans are only helpful for people with sucky credit who don't have a downpayment. We had the home insurance money and great credit so it didn't help for us.

Response by GySgt Arthur Bauman made Sep 9 at 2019 10:26 AM

GySgt Arthur Bauman — Mon, 09 Sep 2019 10:26:35 -0400

Its a good thing , only if you have fair to good credit . We would love to own our own home ,Our credit is pretty bad , we can't get a VA Loan .