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Debunking the Myths About VA Loans

To navigate the myths and concerns about home purchases with veterans, it’s vital to team up with an experienced real estate professional. Look for someone well-versed in VA loans who can guide you through the process and connect you with a trustworthy lender. Their expertise will ensure a smooth transaction, whether you’re buying or selling.

Myth #1

VA loans are difficult to qualify for:

 

VA loans boast fewer credit constraints compared to conventional alternatives.

These relaxed criteria, such as a more forgiving debt-to-income (DTI) ratio and greater flexibility regarding credit scores, often simplify the qualification process.

However, it’s important to note that eligibility varies depending on individual circumstances and the lender’s policies.

Myth #2:

All VA loans require a down payment.

While conventional loans generally require down payment options that can reach up to 20%, no such thing is required with a VA home loan at or under the local conforming limit.

You can put money down, of course, but it’s not a requirement.

Myth #3

VA loans require private mortgage insurance (PMI).

VA loans spare you the burden of Private Mortgage Insurance (PMI), a cost that can inflate monthly payments by 0.2%-0.9% when down payments are below 20%.

Unlike conventional mortgages, VA loans don’t necessitate PMI, providing significant savings. However, it’s essential to note that VA loans come with a funding fee unless the borrower is a Veteran with a service-connected disability. This fee, though present, often proves less costly compared to the long-term expense of PMI.

Therefore, while VA loans eliminate one financial obstacle, understanding the nuances of their funding structure remains crucial for prospective homeowners.

Myth #4

VA loans are harder to get through underwriting

 

“Underwriters are encouraged to consider to every possible appropriate factor in seeking a proper basis for approving loan
applications for every qualified Veteran”

VA Pamphlet 26-7, VA Lender Handbook, Current Issues

“As Long as Lenders document their reasoning, it is extremely unlikely VA Staff would ever take issue with their decision.”

Bill White, Circa 1944

Myth #5

VA loans are not assumable.

FACT: VA Loan assumability is a valuable feature often overlooked by homebuyers. Essentially, an assumable mortgage permits the buyer to take over the seller’s existing VA loans, potentially at a lower interest rate than prevailing market rates. This can translate into substantial savings over the life of the loan.

Moreover, assumable mortgages enable individuals who may not initially qualify for a VA loan to gain access to its benefits. However, it’s crucial to note that assuming a VA mortgage involves meeting specific requirements, so consulting with your Realtor and lender is imperative to ensure eligibility and understand the process thoroughly.

Don’t miss out on the opportunity to leverage this advantageous aspect of VA loans.

In conclusion:  There’s a lot of misinformation regarding VA loans. People seem to think that there’s a lot you can’t do with a VA loan, but there are some great options available that are actually quite vast. Hopefully, this can clear up some of your questions. If you have any remaining questions about a VA loan process, reach out to me so I can get you the help you need, and remember…..This Street Will Lead You Home!

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