Mortgage loans were guaranteed to veterans by the U.S. Department of Veterans Affairs (VA) as part of the GI Bill of 1944. This has been a very effective method of providing veterans with the necessary financial resources to purchase a home. Since its inception, over 600,000 veteran mortgage loan have been granted. Unfortunately, a number of veterans and their families are not participating in this successful program because of myths and misconceptions. These myths are just not true.
Myth: You Need Perfect Credit. FALSE
The VA loan was designed specifically to help veterans and members of the military obtain home loans. One of the most important features of veteran mortgage loans is the flexibility and forgiving guidelines when it comes to a credit rating. The reality is that the VA does not require a specific credit score, but the private lender issuing the mortgage may have specific credit requirements. Many veterans with just a fair credit rating are able to obtain a home loan.
Myth: VA Loans Cost More. FALSE
There are expenses involved with obtaining any mortgage. A veteran will have to pay closing costs as well as upfront expenses. These costs, as well as interest rates, are not more for veterans obtaining veteran mortgage loans. In most cases, rates for a VA loan are very competitive, if not significantly less, than a conventional mortgage loan. With veteran mortgage loans, there is no down payment required. The VA does have limits on the amount a borrower will pay for closing costs.
Myth: VA Loans Limit A Veteran’s Purchasing Power. FALSE
The purchasing ability may be determined by the area where a home is purchased. A veteran who qualifies is usually able to purchase a home valued at over $400,000, without the need to provide a down payment in most areas of the United States. In areas where the homes are more expensive, the VA may put a limit of just over $1 million. The VA doesn’t restrict the value of a home a veteran can purchase. The loan amount may only indicate how much a veteran can borrow before a down payment may be necessary.
Myth: VA Loans Take A Very Long Time To Close. FALSE
Too many people believe a VA loan is extremely slow and filled with excessive amounts of bureaucracy. There was a time in the distant past where closing time was an issue. During the past two decades, the program has changed and is now extremely efficient. The VA appraisals for properties are now usually back in ten days, which meets the industry standards. There is now very little difference between conventional mortgage loans and VA loans with regard to closing time. Starting in 2015, VA loans have a higher rate of success when it comes to closing when compared to conventional mortgage loans.
Myth: VA Loans Are A One-Time Benefit. FALSE
Qualified borrowers can utilize the VA loan program many times. A veteran can even have more than one active VA loan at a time. Over 16 percent of VA loans are received by military members on active duty.