If you or your spouse are part of the United States Military, you might not know it, but you may have access to a powerful resource to help you become homeowners. A loan backed by the U.S. Department of Veterans Affairs (VA) is exclusively available to those eligible and may have more favorable terms and lower costs than other loans. However, there are some intricacies unique to VA loans that have caused speculation and rumors that may deter borrowers from even inquiring about them.
Let’s check out some of the most common VA mortgage misconceptions and equip you with the proper knowledge before you start the homebuying process.
Myth 1: A Veteran Can Only Use Their VA Home Loan Benefits Once
VA home loans are available to eligible borrowers if they have entitlement. Entitlement is the amount that the VA will guarantee on your loan, and you start with full entitlement if you’ve never taken out a VA loan. Even if you’ve taken out a VA loan, you can potentially take out another with your remaining entitlement. It’s even possible for borrowers to have more than one active loan at the same time.
Keep in mind that borrowers with full entitlement don’t have limits on loans over $144,000 but those with remaining entitlement do have loan limits.
Myth 2: VA Loans Take Longer to Close
While the VA loan process does have more steps than a traditional mortgage, the time it takes to close a VA loan is comparable to other loan types. You can also avoid an overly long and drawn-out process just like any other mortgage with proper planning. Make sure to plan for your VA loan by educating yourself about the intricacies of the terms and guidelines, getting your certificate of eligibility (COE) and finances ready and working with reputable professionals including a loan officer and real estate agent. All of this can help speed up any mortgage process.
Myth 3: All VA Loans Cost More Than a Traditional Mortgage
One loan type doesn’t inherently cost more than another. It all depends on your specific needs, eligibility and loan terms. Interest rates for VA loans are often competitive with, if not below, conventional loans, a down payment isn’t typically required and the VA limits what the borrower pays in closing costs. All of this can help minimize the costs of a VA loan. The VA also doesn’t normally require mortgage insurance, which can greatly affect your monthly mortgage payments.
Myth 4: VA Loans are Harder to Qualify for Than Other Mortgages
Yes, VA loans are only available for eligible service members (and other eligible borrowers that we’ll cover in the next section) but other than that, they generally have fewer restrictions when compared to other loan types. Those may include allowing a higher debt-to-income ratio (DTI) and more leniency with your Fair Isaac Corporation (FICOÒ) credit score. These advantages vary from person to person and their unique financial situation and needs, so make sure to confirm what’s possible for you.
Myth 5: Only Active-Duty Military and Veterans Qualify for VA Loans
Although active-duty military and veterans are the most common borrowers of VA loans, they aren’t the only ones that are eligible for them. Other eligible borrowers include service members, National Guard members, Reserve members and surviving spouses. To qualify for any VA loan, you’ll need a certificate of eligibility (COE), which will verify your status as active-duty, veteran or other qualified borrower and proves that you meet the requirements for a VA loan. Check the VA website to learn more about these eligibility requirements.
Myth 6: A VA Appraisal is Worse Than a Regular Appraisal
VA appraisals aren’t that much different from a regular appraisal for a traditional mortgage. Sure, if the property is in poorer condition than a move-in ready home, the appraisal process might become nightmarish. But borrowers who choose homes in good condition and that meet the VA’s minimum property requirements, the VA appraisal should be a breeze.
Myth 7: A VA Loan Only Lets You Buy a Single-Family Home
You can do a lot more with a VA loan than just buy a single-family home. VA loans can help you buy a condo, build or renovate a home, refinance your current loan for a lower rate or monthly payment, get cash out, and more. A VA loan is flexible enough to help you achieve your goals and meet your specific needs.
Break Free from the Rumor Mill
Don’t let hearsay dissuade you from becoming a homeowner. VA loans are different from a traditional mortgage but not inherently more difficult. As you’re getting ready to buy a home and are considering a VA loan, it’s imperative to understand any prerequisites, requirements and essential planning steps that you need to take. Most importantly, make sure you’re properly educated about how a VA home loan could help you and your family. Don’t believe everything you hear through the grapevine.
This information is intended for educational purposes only. Products and interest rates subject to change without notice. Loan products are subject to credit approval and include terms and conditions, fees and other costs. Terms and conditions may apply. Property insurance is required on all loans secured by property. VA loan products are subject to VA eligibility requirements. Adjustable Rate Mortgage (ARM) interest rates and monthly payment are subject to adjustment. Upon submission of a full application, a mortgage banker will review and provide you with the terms, conditions, disclosures, and additional details on the interest rates that apply to your individual situation.
