The Department of Veteran Affairs (VA) backs flexible, low-interest mortgages for members of the U.S. military (active duty and veterans) and their families. VA loans do not require a down payment or mortgage insurance, and closing costs are generally capped and may be paid by the seller. A funding fee is charged on VA loans as a percentage of the loan amount to help offset the Program’s cost to taxpayers. This fee, as well as other closing costs, can be rolled into most VA loans or paid upfront at closing. That said, with all of the great benefits to be had with VA loans, there are potential challenges and complexities as well. But it doesn’t have to be confusing.
There are several important VA home loan myths and misconceptions that can get in the way of veterans successfully buying a house. Let’s clear them up!
Myth #1: You Cannot Have Two VA Loans at Once
VA borrowers may be looking to retain their current home and purchase another using their remaining entitlement (referred to as Second Tier Entitlement). One common scenario is when a VA homeowner has to relocate to a new duty station but wants to keep and rent out his or her primary residence. Another is when it’s just tough to sell a current home when considering the purchase of another.
Myth #2: You Cannot Use a VA Loan to Purchase Distressed Property
A VA Loan can be used to purchase a foreclosed or short-sale property with as little as no money down, if the property meets the VA home loan guidelines set forth by the Department of Veterans Affairs. This article highlights helpful tips when considering the purchase of distressed properties with VA loans.
Myth #3: Military Overseas Cannot Use VA Loans
This is an easy-to-debunk VA home loan myth. Military members deployed overseas can simply sign a document called Power of Attorney or (POA), designating a spouse or a person of their choosing to act on their behalf for an overseas VA loan transaction. That said, only a spouse can satisfy the occupancy rule (move in within 60 days of closing) in a deployed serviceperson’s stead.
Myth #4: VA Loans are Burdensome and Complex
There may not be one single fact that disproves this VA home loan myth, but as anyone who has worked through the process with a qualified banker knows, there are simple steps to the VA loan process that help you get through it easily and successfully.
While there are many common VA home loan myths, the overwhelming truth is that VA loans are a great product for veterans, whether you’re buying your first home or you’re an experienced home buyer.
Don’t make assumptions about your eligibility and don’t be swayed by VA home loan myths. If you have any questions, consult with a banking expert who has the important knowledge and will have your back.
West Town Bank & Trust has helped hundreds of veterans manage this process. To learn more, please call me at (252) 339-0933 or send me a note at [email protected]. Be sure to be on the lookout for our next article on VA Interest Rate Reduction Refinance Loans (VA IRRRL).
About West Town Bank & Trust
At West Town Bank & Trust, our most important goal is to understand what’s important to you, what’s getting in your way, and what you hope to achieve, so we can help you get there. Since 1922, we’ve been creating long-lasting relationships with our customers based on old-fashioned values and future-thinking ideas. Whether solutions come from surprisingly innovative tools or trusted products you’re familiar with, our single-focused purpose is your financial well-being.
Whether you’re purchasing your first home or refinancing an adjustable rate mortgage, it’s our commitment to find the most suitable loan program available to you at the lowest rate possible. With hundreds of programs available, let us help you unlock the feeling of home today.