The biggest misunderstanding first – maybe the grand-daddy of them all – the VA Home Loan programs must be filled with bureaucracy, red tape, and form after form. The actual truth: It only takes minutes to fill out a VA home loan application and can be done on-line.
VA home loans are a unique financing tool which gives you strength and flexibility in becoming or continuing in Home Ownership.
A variation on the ‘Red Tape’ misconception is that the VA Appraisal is a ‘nightmare’. The truth: the VA appraisal isn’t much different from the average standard appraisal. Appraisers use the VA’s “Minimum Property Requirement” (MPR) guidelines to appraise a home. The MPR is to ensure that you don’t end up with a house that’s in poor condition. Plus the VA is not for funding fixer-uppers, or Flippers.
Appraisers’ main use of the VA’s “Minimum Property Requirement” (MPR) guidelines is to determine if your potential home is safe, structurally sound, and sanitary. They double-check the things you look at, but with an experienced eye and may catch things that could have gone over-looked.
The VA wants service members to purchase solid, move-in ready homes. Not having them being taken and stuck with a dilapidated clunker or money pit. The use of the MPR is to help you find a good home that is also in good condition. Plumbing and electrical systems must be safe and in good condition. Heating must be adequate. Roofing must be adequate. Loose paint must be scraped and repainted. There can be no leaks, excessive dampness, defective construction or decay. And most certainly no signs or existence of: termites, destructive insects, fungus growth or dry rot.
A VA Loan can mean NO DOWN PAYMENT! You read right, no down payment. The VA loan is one of the only mortgages available that doesn’t require a down payment. 100-percent financing can be a great option. 9 in 10 borrowers, on average, take advantage of the full 100 percent financing option. Most qualifying service members who purchase within VA loan limits don’t have to make a down payment, but there are rules surrounding this perk. Which brings us to the next misconception; what the difference is between “guaranty” and “guarantee”.
There is a jarring difference between “guaranty” and “guarantee” when it comes to VA Home Loans. No one is guaranteed a loan. Even service members with VA loan entitlement.
The word “guaranty” is used in VA loan discussions. Many buyers are misled by this and think military service entitles veterans to a “no strings attached” (guaranteed) VA loan. What “guaranty” refers to is the partial amount of each VA loan that is additionally backed by the government (25% of the loan usually). If there is a default, the amount under guaranty will be paid back to the lender by the government. Remember that “guaranty” is much different than “guarantee.” Each VA loan is under “guaranty,” but no one is guaranteed a VA loan. VA lenders aren’t handing out loans to anyone with a social security number. As with any loan product, there are standards to meet, and criteria to satisfy.
For our dedicated service members, it’s certainly nice to know that VA loans are more borrower-friendly and accommodating than other loan options. VA home loans are a unique financing tool which gives you strength and flexibility in becoming or continuing in Home Ownership.