As we near the 4th of July, I often think about our Veterans and their service to our country. Most of you are familiar with the VA Loan product that is available to active/retired military and to others who serve (e.g., Reserves). Many sellers avoid accepting real estate contracts from buyers with VA Loans because the belief it will take longer and the appraisal process will be tougher. Let’s explore that a bit more….
Belief #1: The Process Takes Longer
When I do VA Loans, the process takes the same amount of time as a conventional loan. National “Big Box” banks (e.g., Quicken) seem to take longer from what I hear…typically 45-60 days to close. I’m not sure why it takes them so long as the process is almost identical to conventional loans and VA guidelines are well defined. Long ago, before the days of credit modeling and data analysis, things might have taken longer but not in today’s data driven marketplace. Net-Net: The process doesn’t take any longer if you use the right lender. I close mine in 26-30 days.
Belief #2: The Appraisal Process is Tougher
From an outsider view, the appraisal guidelines do feel more stringent but not unreasonably so. What I find to be more of an issue is that once someone is approved as a VA Appraiser–it’s feels like a lifetime membership. This is very different from a more traditional bank panel where lenders actively monitor the quality of appraisers and their work. Net-Net: The issues with the appraisals are more centered getting the right appraiser and less about the appraisal standards.
Belief #3: VA Loans have more Seller Fees
There are a couple of specific things that pop up (e.g., pest inspection for things like termites, notary & recording fees) that are VA loan related but these tend to fairly small (Total of $100-300) in the scheme of things. All closing costs are buyer/seller negotiated just like in a conventional loan. Net-Net: The fees are slightly more than conventional loans, but we’re talking about a couple hundred dollars…not a couple thousand.
Have a safe and joyous 4th of July!!
Geoffrey Davis – Mortgage Loan Consultant
First United Bank & Trust
6401 S. Custer Rd.
McKinney, TX 75070