We are about to destroy 3 myths about the VA loan program in California. The VA loan program is the best benefit available to Veterans, allowing them to purchase a home with no down payment. And as of 2020, there are no VA loan limits tied to the allowance for no down payment purchases. On top of that, VA has very aggressive interest rates and no monthly mortgage insurance. Even with these huge advantages there continue to be myths about the VA loan program that can make it tough to get an offer to buy a home accepted.
Myth #1 : VA Loans Take to Long to Close – FALSE
This depends on the experience of the lender, but if you’re working with a California VA loan specialist then a VA loan can close very quickly. It all depends on the internal process of the lender and the initial prequalification of the borrower. Some lenders will even do a “fully underwritten PreApproval” prior to the offer being made. This is always the preferred method of VA loan PreApproval, but not all lenders will go through the extra step of actually have an underwriter review the initial loan package. If you go with a lender who has fully underwritten your loan package prior to making an offer, then you will be in a very strong position to not only get your offer accepted, but also to close very quickly. The only item you’ll be waiting on is the VA appraisal. A good VA lender should be able to issue a “Clear to Close” in as little as 15 days from the day of your accepted offer.
Myth #2: VA Loans Cost the Seller More – FALSE
Accepting a VA offer does not cost the seller anything that would be different from any other offer. This myth stems from the idea that with a VA loan there are “non-allowable” closing costs, or closing costs the buyer is not allowed to pay. What someone who believes this myth to be true doesn’t understand is that even fees that are on this list CAN BE PAID by the Veteran as long as the total amount of these fees are less than 1% of the VA loan amount. In California, where home prices tend to be higher than other parts of the country, and where most VA purchase loans tend to be with $0 down payment, 1% is a big number and more than covers these “non-allowable” fees. Most typical closing costs are not included in the calculation. For example, title insurance fees, loan discount fees, and the the appraisal fee are not included in the 1% calculation. A Veteran using the VA loan program in California can even pay for the required termite inspection report and can pay for any required repairs, just like with any other type of financing.
Myth #3: VA Loans are harder to close – FALSE
This may be true for some lenders, but again, this is where a California Veteran needs to make sure they are working with a lender AND loan officer who specializes in the VA loan program. A lender who specializes in the VA loan program will have more dedicated support and knowledge about the VA loan program that a lender who is a “jack of all trades”. A California Loan Officer may run into one to three VA loans in a year. A California VA Loan Specialist may close more than 50 or even 100 VA loans in one year. The California VA Loan Specialist will have more knowledge about the VA loan program and will have seen many more scenarios and have solutions for almost any scenario versus a loan officer closing one to three VA loans in a year. So yes, a VA loan may be harder to close for some lenders, but if you are working with lender and loan officer who specialize in the VA loan program, then the VA loan program will be easier to close than other types of loan programs. Think about it. No down payment to verify. No max “debt to income” ratio to worry about. Very flexible underwriting requirements and FICO score requirements. It just easy.
Authored by Tim Storm, a California VA Loan Officer specializing in VA Loans. MLO 223456. – Please contact my office at Fairway Independent Mortgage Corporation NMLS 2289. My direct line is 714-478-3049. I will prepare custom VA loan scenarios that will be matched up to your financial goals, both long and short-term. I also prepare a Video Explanation of your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.