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8 VA Home Loans Myths Busted

December 6, 2022blog0

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We have all heard about bad VA loans from other people. Some crazy stories about VA loans by Dream Home Mortgage might make you wonder if the benefit is worth it. Have you heard of evaluations by the VA? Or you were told you need a FICO score of 700 or more. Or maybe you’re unsure about your home loan advantage – utilize it or lose it, right? Several myths have been told about this loan program backed by the government. Some are false (no, it is not to utilize it or lose it). With facts, it’s easy to disprove false beliefs. Since 1944, the VA has backed more than 22 million home loans, making it possible for millions of Veterans to reach the American Dream. It’s time to tell the truth from the lies. If you look more closely, you might find out what you need to know about VA loans.

Myth 1: To be approved, you must have perfect credit

False. Although the VA wants certified lenders to offer VA Loans to all qualifying applicants, it does not specify a minimum credit score requirement. Each lender uses its credit standards to determine whether a borrower can repay the loan. Lenders are expected to use the VA’s underwriting guidelines for credit, debt, and income with discretion and flexibility. A credit score of 620 or higher is often required to qualify for a VA loan.

Myth 2: Only Combat Veterans Are Eligible

False. Veterans, active-duty service members, reservists, members of the National Guard, surviving spouses, and others can qualify for home loan perks. You may be eligible if you are a(n):

Military Veteran Serving Active Duty

Academy Cadet or Midshipman Surviving Spouse of a Reservist or Guardsman Officer, National Oceanic & Atmospheric Administration (NOAA) Officer, United States Public Health Service

Myth 3: The VA home loan benefit can only be utilized once

False. If you qualify for a VA home loan, it is yours for life and, in some situations, can be used several times. Numerous Veterans utilize it again for their home finance demands. You can use it to purchase a starting home and later upgrade to a larger residence as your family grows. And you can use it again to refinance your property for a reduced loan rate or to withdraw cash from the equity in your home. Depending on the value of each property you purchase, you may or may not be required to regain eligibility to reuse your benefit. As long as you have the entitlement to back your loan, a VA loan can be an excellent choice for a mortgage at any time of life.

Myth #4: The VA Appraisal Takes Too Long

VA appraisals should not take any longer than standard appraisals. After signing the purchase agreement, your lender can obtain the VA appraisal. Once ordered, the VA will send the report to the next VA-approved appraiser who is available. Depending on the property’s location, VA appraisals might take anywhere from seven to twenty-eight working days.

Myth#5: VA Loans Have Excessive Government Involvement Administrative Red Tape

False. The majority of VA lenders are authorized by the VA to automatically underwrite loans without submitting them to the government for approval. A reputable lender will create a relationship of trust with you. And you should feel comfortable working with them throughout the entire loan process. Unless there are extenuating circumstances, you will likely not interact directly with the government when applying for a VA loan. You have the option of obtaining your COE via the VA website, but even for this stage, your lender can act as a liaison.

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Myth #6:Your VA home loan benefits are limited

You are restricted in what you can do with your VA home loan benefits. Many individuals believe that VA loans are exclusively available for the purchase of single-family homes. But consider all the ways you might use your VA home loan benefits:

  • Purchase a single-family home
  • Purchase a condo in a VA-approved community
  • Acquire a multifamily dwelling (up to 4 units per VA-eligible borrower)
  • Create a house
  • Acquire and enhance a property
  • Make energy-efficient improvements
  • Purchase a mobile home and/or lot (certain lenders)
  • Streamline Refinance your VA loan for a reduced interest rate or monthly payment
  • Refinance your VA or non-VA mortgage with or without a cash-out option.

Myth #7:The Majority of Veterans Are Not Eligible for VA Loans

False. In fact, the vast majority of Veterans qualify for VA loans. More VA loans are authorized than ever before. In 2016, the VA guaranteed a record 705,474 mortgages with a total value of over $179 billion. From January through September 2017, VA and conventional loans both had a closing rate of 76.1%, according to Ellie Mae statistics.

Myth #8: VA Loans Have Higher Interest Rates

False. Typically, VA loan interest rates are as low or lower than conventional loan rates. From January to September 2017, the average interest rate on 30-year conventional loans was 4.39 percent, according to statistics from Ellie Mae. The average VA rate during the same period was significantly lower, at 4.05%.

TIP: When comparing rates, be sure to receive the Annual Percentage Rate (APR) in addition to the stated rate. A greater APR compared to your quoted rate usually results in more fees.

See what you qualify for

If you’re ready to get started or simply want more information about the process, the first step is to receive various, obligation-free rate quotations. Book a free one-on-one consultation meeting with our expert lenders at Dream Home Mortgage.

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