In 2020, more than 1.2 million VA loans were issued by lenders across the country. Those loans helped qualified military members and their spouses get the financing they needed to purchase a home or refinance an existing mortgage.
Unfortunately, there’s a lot of misinformation floating around about the VA Loan Guaranty Program. That’s why we’re separating fact from fiction with respect to five common VA loan myths.
- VA is too strict where I live. We’re not sure how this myth got started, but it’s not true. Qualifying for a VA loan is very similar to a conventional loan. There can also be advantages with possible lower credit score minimums or no down payment requirement.
- It takes too long to close a VA loan. Working with the government makes everything take longer, right? Not with a VA loan. It takes about the same amount of time to close on a VA loan as it does to close on other types of loans. In 2020, it took an average of 61 days to close on a VA loan compared to 62 days for an FHA loan and 57 days for a conventional loan, according to Ellie Mae’s December 2020 origination insight report.
- VA appraisals are a nightmare. Appraisals for VA loans often get a bad rap. If you have your heart set on a fixer-upper that needs a lot of work, you may run into some trouble during the appraisal process. But if the home of your dreams is in good condition and meets the VA’s criteria, the appraisal process won’t be much different for a VA loan than it would be for a conventional loan. Just make sure you have a VA-approved appraiser conduct it which your Lender will assist you with.
- I can’t get a VA loan while serving overseas. One of the VA’s loan conditions is that you must begin living in the house you purchase within 60 days of closing. But if you’ll be returning to the home within a year, you can file for an extension of up to 12 months. You can also satisfy the occupancy requirement if your spouse or other qualifying dependent will be living in the home even if you’re not during these timing requirements.
- VA loans are more expensive than conventional mortgages. This rumor got started because VA loans have an upfront funding fee ranging from 5% to 2.3%, depending on the loan type, whether you have used your VA entitlement on a previous transaction and down payment amount. But the overall cost of a VA loan is typically less than a convention loan because there’s no PMI on VA loans and there’s a limit to how much you can pay in closing costs. Plus, VA loans typically have lower interest rates than conventional loans. In 2020, the average rate on a 30-year fixed VA loan was 2.66 compared to 2.96% for both conventional and FHA loans, according to Ellie Mae.
If you’re eligible for a VA loan and want to learn more about how we can you finance the purchase of your next home or refinance your existing mortgage, give us a call today.