It may come as a surprise to many that veterans can and do experience difficulties when they begin the process of purchasing a home. With VA loan options allowing for a seemingly easy “in” to the home-owning experience, what is it that the general public is failing to understand veterans’ options? Below, we’ve covered why some veterans experience trouble when it comes time to purchase a home and the common fears that plague buyers and sellers alike.
Why Veterans Experience Difficulties Purchasing Homes
Post 9/11, the way that funds have been allocated to veterans looking to purchase homes looks a little different than it once did. Veterans receiving support in the housing market now tend to be resting on the margins of homelessness and homeownership. This has led to an ever-unstable “middle” section of veterans who manage to get by, but fail to leverage VA loans successfully.
Veterans are part of a demographic that’s slowly shifting towards a much younger age range. Young people don’t purchase homes– they rent. Toss in the diversity of the current pool of veterans, and you’re looking at a group of young men and women who are likely to be saddled with the consequences of intergenerational poverty. Veterans coming home from war today are paying for the 2008 housing crash and aren’t receiving targeted assistance.
Common Fears for Sellers and Buyers Regarding VA Loans
Offers by veterans are frequently rejected due to the copious amounts of red tape that accompany VA loans. There are often appraisal delays, which drag out the amount of time sellers have to wait to close on properties, and sellers are responsible for bearing fees that would traditionally fall to buyers.
All too often, sellers are advised by agents to become almost discriminatory towards those with VA financing. These sellers are pushed to take cash and conventional offers in order to avoid the perceived “hassle” of dealing with VA loans.
Understandably, many buyers today feel apprehensive entering the market with a VA loan. It’s no secret that sellers and agents are beginning to shy away from offers from veterans who are relying on VA loans to purchase homes; why would veterans feel confident?
Most veterans are hesitant to give up the benefits of a VA loan in favor of pursuing more conventional funding options. While they may have a better shot at landing a home with traditional financing, the financial advantages of VA loans are tough to overlook. This leaves many buyers feeling trapped between what’s best for them and what sellers will accept.
Three Misconceptions About VA Loans
Knowledge can empower both veterans and sellers
Concerns about red tape
As mentioned previously, numerous sellers fear the red tape that’s long been associated with VA loans. They don’t want to spend extra time or money trying to close a sale– but the fact of the matter is that most VA loans close within thirty to forty-five days. The program used to involve copious amounts of snail mail, but the process has become quicker and more efficient.
Borrower qualifications are too lax
Some sellers are apprehensive that veterans approved for VA loans may not actually be up to snuff. If they can qualify for the loan so easily, who’s to say they’re actually capable of paying for their home? But the VA’s no-down-payment benefit isn’t handed out like candy. Borrowers are still required to meet the certain debt, credit, and income requirements in order to receive financing.
Sellers are saddled with fees
It’s true that in some cases, sellers will need to pony up a little bit of cash to cover fees during a sale to a VA borrower, but this isn’t always true. The only fees that need to be paid by sellers are 1% origination fees, which don’t have to be charged anyway. Veterans are not permitted to pay these fees, but lenders, title companies, and sellers can all pay them.