One of the biggest hurdles real estate agents face with connecting to the veteran and military population is a lack of understanding of the VA loan process.
In the next 5 minutes, you will learn about the Top 3 VA Loans Myths.
Myth 1: VA Loans Take Way Too Long To Close
Fact: VA Loans Close Just as Fast as Conventional Loans and Even Close More Frequently
There’s a lingering myth that loads of red tape cause VA Loans to close more slowly than conventional loans. This is simply not true.
According to national data collected by Ellie Mae, conventional loans closed in an average of 40 days while VA Loans closed in an average of 41 days.
Ken Robbins, Co-Founder of Millie, personally experienced this process just a few years ago. He was buying his current home with a VA loan as he was transitioning from the military. The home closed in just under 30 days.
Not only do VA Loans tend to close just as fast as conventional loans, but the Ellie Mae data also suggest that borrowers who take out VA Loans are actually more successful in closing than those who take out conventional loans. Typically, 68% of VA Loans closed while only 49% of conventional loans closed.
Myth 2: VA Loans are More Risky Than Conventional Loans
Fact: VA Loans Have Been The Safest On the Market Since The Housing Crash of ‘08
VA Loans’ competitive interest rates and $0 down payments often leave people thinking, “What’s the catch?” Many assume that VA Loans are more risky because they come with so many benefits. The fact of the matter is: VA Loans have had the lowest foreclosure rates of any type of mortgage for the last seven years, according to the National Delinquency Survey.
This is something we have seen SO many times. A realtor on the selling side will tell their client to turn down an offer from a buyer using a VA loan despite the offer being for MORE MONEY than the conventional loan buyer. Thus, they just cost their seller money. The amount of money for a down payment is not an indicator of the strength of the buyer in all cases.
Myth 3: The VA Appraisals Tend to Be Conservative and Undervalue Homes
Fact: All Appraisals Cause Differences of Opinion, and VA Appraisals Are No Different
VA appraisals have developed a bad reputation for undervaluing homes, but no data suggest that these appraisals over more conservative estimates than conventional appraisals. Rather, it seems as if difference of opinion about property value is just a common phenomenon that affects all types of loans.
A 2012 study from the National Association of Realtors showed that 1 in 3 real estate transactions had problems because of an appraisal.
The VA appraisal process, like all other appraisal processes, is influenced by subjective judgments and statistics from supposedly comparable homes that might not offer good market information.
In Ken’s experience, he rarely saw VA appraisals differ significantly from others. When he and his wife bought their home, the VA appraisal was ABOVE their purchase price, meaning they gained instant equity in the home.
The appraisal was done efficiently and they missed no closing deadlines as a result.
If you need an agent that understands the VA Loan Process and can help with your real estate needs please feel free to reach out to me at your convenience at 702-815-9478, or RobertK@bhhsnv.com
