Strategies for veterans buying a first time home using a VA Loan


Tips for Veterans Buying a Home for the First Time Using a VA Loan

In many parts of the country, real estate markets have experienced inventory shortages, especially in major metropolitan areas. The seller, in many cases, will have several competing offers to choose from, and it may be difficult for the veteran buyer to find an owner who will accept an offer using VA financing. Based on past issues with veteran buyers, several strategies will be illustrated on how to make your VA offer as competitive as other types of financing, such as a conventional or FHA offer. You can discuss your options with your loan officer to increase your chances of having your offer accepted.

There are 5 main areas to watch out for :

1) Closing costs

2) Misunderstanding of mandatory fees

3) VA appraisal vs. conventional appraisal or FHA appraisal

4) The offer with more money seems better for a seller..

5) The VA offer requires a termite cleanup.

These five issues will be discussed in more detail in this article. By understanding these 5 areas of common misconceptions, you will most likely increase your chances of getting an offer accepted.

Many veterans need help paying their closing costs. In a seller's market, instead of asking the seller to help you pay your closing costs, you are better off asking your lender to increase your interest rate and apply for a credit to cover your closing costs. As for additional fees, many agents mistakenly believe that the seller is responsible for mandatory fees.

This group of fees includes: escrow, processing and underwriting. VA guidelines state that these fees are the responsibility of the seller when the lender charges a loan opening point (which is rare in today's lending environment).

This concern must be addressed so that all parties have an accurate understanding of the VA guideline. The VA appraisal is generally considered more stringent than a conventional or FHA appraisal. The most significant misinterpretation is that a VA appraiser may require more repairs on the property in question In today's lending world, due to stricter federal guidelines, conventional, FHA or VA loan appraisals use very similar terms.

Many sellers feel that a conventional offer with a 20% down payment seems to be a stronger offer than a VA loan with no down payment. The offer with the larger down payment is supposed to have a higher probability of closing. If both buyers have been pre-approved by an experienced loan officer, and the borrower's information has been pre-approved by Fannie Mae's underwriting software called Desktop Underwriting, then both have the same chance of closing.

The only area where the VA loan may have a slight disadvantage is that it requires reporting and authorization, which is not the case with conventional and FHA loans. The VA guidelines allow you to pay for the repairs, but not the report itself. Offer to pay for repairs if the report is available and know the costs. If the repairs are costly and the seller chooses to refuse them, you may have to give up that house.

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