The head of the VA loan program, Mike Frueh calls this the “Myth of my Father’s VA,” where loan takes a lot of time before it is approved, difficult to process, and too cumbersome. Frueh said that countering these myths is simple. By educating the veterans and their families and constantly addressing the problems on VA loans, the VA loan program can be made better.
Here are 4 VA loan myths that hamper veteran home buyer.
Myth 1: Perfect Credit is needed
This is 100% false!
The VA loan program was created for the sole purpose of helping retired service men and women who have served and sacrificed so much for their country. The main objective of the VA loans is to create more flexible credit guidelines that benefits veterans. Shorter waiting period are also a typical feature of the VA loan program.
Myth 2: VA loans cost more
The VA loan program hosts some big-time benefits for the millions of veterans in the country. These benefits made homeownership possible to veterans even with zero dollar down payments. The VA also limits the amount of loans to what lenders can charge at closing costs. There is also no mortgage insurance that usually limits a veterans’ buying power. There is only an upfront funding fee that every VA buyers have to contend with. This funding fee can be paid in cash or added on top of the loan. The VA funding fee is based on the members’ down payment, service history, and if this is the first time a veteran has used this benefit. Conventionally, it is 2.15 percent of the loan amount for first time buyers, but for a veteran who has received compensation for a service-connected disability, no pay is to be collected.
Myth 3: VA loans take forever to close
While there are some truths about VA loans slow approval reputation and being choked with red tape, over the last 15 years, the VA loan program has significantly improved and became much more efficient as better policies in the program were incorporated. Today, it usually takes about 10 business days for loans to be approved which is on par with other loaning agencies.
Myth 4: Zero Dollar down payment loans are risky
This makes you ask the question, “How?”
According to the data from the Mortgage Bankers Association, it states “These zero dollar down payment loans have had the lowest foreclosure rate of any mortgage on the market for most of the past eight years.”
The continued success of the VA’s zero dollar down payment programs is due to the common sense guideline for discretionary income that was implemented by the VA. This program made sure that every veteran buyer will have no problem regarding their mortgages. From the more than 2 million active VA loans, the VA’s foreclosure specialists regularly checks, updates, and reaches out to homeowners who are at the first sign of danger. More than 90,000 veterans were helped by the VA foreclosure team avoid foreclosure in 2015 alone. Borrowers that are in jeopardy were also offered foreclosure alternatives by the VA’s foreclosure team.
Frueh said “There are not many times that a government agency is leading the industry in something, and in something as important as housing. I want our children’s VA to be better than it is today, and we’re doing everything we can in our power to get there.”