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VA Loans – The Bad and The Good

VA Loans - The Bad and The GoodI blogged about VA loans in October, explaining that they are the best deal in the mortgage world.

VA loans have low interest rates, no mortgage insurance, and they allow for 100% financing.

You can read my entire VA blog here.

DRAWBACKS TO VA LOANS

Despite all the benefits of a VA loan, there are four drawbacks that mostly affect sellers.

  1. No Down Payment: While this is a great benefit for cash-strapped veterans, it also leaves no room for appraisal issues. If borrowers have little to no cash and an appraisal comes in low, the only option is renegotiating the purchase price.
  2. VA Appraisers Only: The Veterans Administration requires that we use only VA approved appraisers. B/c we have no control over them, we sometimes have issues with quality and turn-times.
  3. No “As Is” Purchases: All VA Loans require a termite report and all Section I repairs must be cleared, along with any Section II items that represent “health and safety” risks. For older homes, this requirement can often be a deal-killer.
  4. Speed: VA purchases are one of the few types of purchases we cannot close in 14 days. This is b/c we have to wait for VA appraisers and also deal with the VA itself, slowing us down by at least a week on average (we need 21 days to close a VA transaction).

THE GOOD

As mentioned above, VA loans are a great way to help veterans purchase homes with very little cash and excellent interest rates.

Equally important, we close the vast majority of our VA loans without any issues at all.

I only illuminate the above drawbacks for educational purposes, as they are issues every agent should be aware of.

Jay Voorhees
Founder/Broker | JVM Lending
(925) 855-4491 | DRE# 01524255, NMLS# 335646