VA Loan Myths - Debunked
California is home to the most active duty and prior military Veterans of any state and yet, our beautiful state ranks 34th in the percentage of Veterans using their VA.
Here is an example of what this means in numbers. Virginia has 726,740 Veterans and 170,190 active VA loans. In comparison, California has 1,893,539 Veterans and only 170,463 active VA loans (http://www.va.gov). So in a state where over a million less Veterans reside than California, there is virtually an equal number of active VA loans. Some argue, it’s because Virginia has more active duty and lower prices. Neither argument holds up.
California has 190,160 active duty military stationed here, where Virginia only has 117,084. Yes, Virginia home prices are lower on average, but the VA loan doesn’t have a maximum amount, so it works equally well in both price ranges!
The VA Myth Epidemic
There is overwhelming confusion caused by every lender having different rules, known as overlays, on VA loans. I am mentioning this here because I cannot overstate the importance of understanding this core problem with VA. Until more of us are aware, we simply won’t know what questions to ask or how to avoid unnecessary problems when buying a home.
Confusion from overlays leads to multiple myths which are sabotaging veterans when we go to buy a home. Let’s start with some truths; most of us have never been educated on the full benefit our VA loan offers us. As an air traffic controller, I spent three of my eight years of service in training on air traffic control duties. Counter this to the three minutes of VA loan information I received when leaving the military at my transition class. When I use the internet to find information, I am only ever two clicks away from an "apply here" ad vs. actually getting the information I need to use my VA Loan Benefit.
As with most things, I initially thought it was just me but I have spoken to enough of my fellow military family and have encountered enough bad information working on VA loans these past twelve years to know that this is another battle we must be aware of in order to win. So here is a quick list of the Top Ten VA Myths I have found that many of us erroneously believe.
VA Myth #1: My VA Loan Eligibility Expires or Can Only Be Used Once
VA loan eligibility does not expire and we can reuse it. We have had clients use their VA for the first time at the age of 86 when it was earned in their twenties. We have also had clients who have used their VA as many as five times! And I am sure there are Veterans out there that can beat that record.
VA Myth #2: My VA loan Can Only Be Used to Buy My 1st Home
The VA loan benefit works great for your 2nd, 3rd, 4th, and dream home too! Because there is no limit on the VA loan amount, other than a maximum loan amount set by each lender (remember those overlays), the VA can be used to buy your dream home. This commonly believed myth often keeps Veterans from buying a home in higher cost states like California and New York. In fact, did you know for the year 2016, you can buy a home in San Diego for up to $580,750 without a down payment? And if you have a down payment, you can go much higher with VA!
VA Myth #3: I Can Only Have One VA Loan at a Time
The VA allows Veterans to buy homes using “partial eligibility”. Veterans can use any remaining partial eligibility to purchase as many homes as the math allows. This is great information for active duty military who move often and prefer to buy a home wherever they are stationed.
VA Myth #4: Qualification Standards are Harder
Let’s face it, more paperwork and conditions are required for all loan types these days. The great news with VA is that income and credit standards are actually more flexible. So even if it feels like a mountain of paperwork is being requested, we find that the VA is still very often the best choice.
VA Myth #5: Purchasing a Condo is Just Like Purchasing a House
Because many of us in San Diego and throughout California purchase condos, it is important to know that condos must be VA approved in order to purchase them. Many industry professionals do not know how to search the VA condo list and neither do the sources they turn to (the Home Owners Association of the complex, the listing agent, or the lender’s own underwriters). Any military person will know what I mean when I say it is a government database, put into place over two decades ago and it is not Google. Please call us if you need help finding an approval or getting an approval for a condo complex not currently approved.
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VA Myth #6: I Had a VA Foreclosure So I Cannot Use My VA Again
You can use your remaining VA eligibility and use the VA again. Even better, we see partial eligibility being used without the Veteran being required to pay off any foreclosure loss the VA incurred. So please look at your VA first, even if you have had a foreclosure.
VA Myth #7: I Am Active Duty and the VA Loan is for Veterans
The VA works for active duty, retired, prior military, reservists, etc.
VA Myth #8: VA Loans Don’t Work on Properties that are Foreclosures, REOs or Short Sales
VA eligibility may be used to purchase these properties. In fact, just a few years ago, over 50% of our clients were using their VA to purchase one of these types of properties.
VA Myth #9: My Current Home is Upside Down, So I Can’t Move Up
This one is one of my favorites. If you purchased a condo or small house several years ago when single then it's time to consider a move! Let's face it, after marriage, several children, and a few promotions, you need a bigger home and the VA works. Even though the market has not completely recovered and your current home is upside down, the VA works. This may be the best news you have received since you purchased the home and the market crashed!
VA Myth #10: I Didn’t Get Approved By My Favorite Bank So I Have to Rent
Remember those overlays? It is disheartening to realize that some of the most restrictive overlays are in place with lenders and credit unions that we trust the most and have been members of since bootcamp. I know what you're thinking but trust me when I say I have been a member myself for over 25 years and I love them for my car loans and insurance. But they often outsource their home loan services, they take a portion of the commission of the agents they call their preferred agents, and they are not leaving many clients happy. Don’t believe me? Take a look at their home buying reviews on their website. In some cases, over one third of their loyal clients left a one star review for their VA loan service. If they were a restaurant, would that be the equivalent of finding a cockroach in your food?
It doesn’t feel great to point this out but I am frustrated enough with over a decade of hearing sad stories that I feel compelled to share this with you so that you will get a second opinion. Especially if you were turned down by your favorite military credit union. A second opinion from us is free and could keep you from experiencing your own missed opportunity. Call us today! We look forward to hearing from you! (619) 422-5900! Or Apply Above for more information...
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Information accurate as of publication date; the views, articles, postings and other information listed in this section are personal and do not necessarily represent the opinion or the position of American Pacific Mortgage Corporation. The material in this section is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee it is without errors.Fri, 2017-09-15 15:20