After honoring and remembering our veterans last month on November 11th, 2023, we decided to take a closer look at VA loans. While VA loans are an important program that allows veterans to become homeowners, many misconceptions surround VA loans. These misconceptions may turn those eligible for VA loans away from leveraging this opportunity.
Myth #1 – Closing Time Lasts Longer
Home appraisals are required for VA loans. If you are not familiar with what home appraisals are, you should note that this process is different from a home inspection. A home appraisal is when a VA-approved appraiser provides their opinion on the cost of the house you are planning to purchase, taking into account facts and market data.
Since home appraisals are required, you may be concerned that they will prolong the closing time. This is not true. Once you sign the purchase contract, your lender can order the VA appraisal which can take anywhere from seven to 28 business days. In March 2022, the average time was 11.8 days.
Another popular concern related to mandatory home appraisals is that repairs may be needed for the loan to be funded. It is important to note that the mandatory repairs are those related to safety, health, and welfare. VA does not require cosmetic repairs.
Myth #2 – Sellers Don’t Like the VA Escape Clause
If you heard about the VA Escape Clause, you may think that sellers would favor other types of loans because of it. In short, a VA Escape Clause allows you to not complete the purchase of the property if the VA appraisal estimates that the house you signed the purchase contract for costs less than what the seller put into the contract.
This should not be a concern for you. Data tells us that as of March 2022, 8 out of 10 VA loan applications started in the last 90 days closed.
Myth #3 – You Can Use a VA Loan Only Once
VA loans are versatile tools that allow you to support any of the following projects:
- Buying a starter home
- Upgrading to a larger home
- Making energy-efficient home improvements
- Refinancing your mortgage
Sometimes you may need to restore entitlement to reuse your benefit. You can apply for your VA home loan Certificate of Eligibility (COE) to know how much entitlement you have left or to make sure that your entitlement is restored.
Myth #4 – You Need a Perfect Credit Score to Get Approved
VA does not require a minimum credit score. Still, you should keep in mind that lenders may still want you to have a minimum credit score. The fact that there is no minimum credit score requirement gives you the freedom to shop around for a lender that will meet your financial and homebuying needs.