VA Loans – Why Veterans love them, and why Realtors should too!

VA Loans - Villa Properties

We reached out to Mark Wharton from Vintage Mortgage Group in Pleasanton to better understand VA Loans.  Here is what Mark had to say:

A lot of Realtors have little experience with VA loans, and what they don’t know they are often afraid of.  Most agents are receptive once I explain the loan process.

From the listing agent perspective, the ONLY difference between a VA and conventional buyer is that:

  • A pest inspection and clearance are required, and can’t be waived.
  • The pest inspection can’t be paid for by the veteran, although it’s okay if the seller or agent pays for the inspection.  The veteran can pay for any repairs.
  • A common objection by some agents is that the VA Appraisal is like a home inspection, which is inaccurate. The VA appraiser is required to check for health and safety items (same as FHA), which are evident to the appraiser. Holes in roof, exposed electrical wiring, you get the idea. Anything that is an obvious safety issue should be fixed anyway, and I’ve never seen anything called out in a VA appraisal that didn’t need to be attended to right away, i.e. nothing picky, just looking for a safe home.

It’s never been a problem getting the clearance, because it’s known up front and everyone is on board. It also makes it very easy when the seller provides a pest inspection with the disclosures, because we can use their report.

Loan types are 30 year and 15 year fixed and 5/1 ARM.

The biggest advantages of VA for veterans:

  • Interest rates better than conventional.
  • Up to 100% financing with no mortgage insurance.
  • Loan limits of $1,050,000 in San Francisco, San Mateo, Alameda, Marin, and Contra Costa Counties. This means 100% financing up to a purchase price of $1,050,000.
  • VA loan amounts are allowed greater than the county limit, up to 1.5 Million. For loans greater than the county limit, the veteran only has to bring in approximately 25% of the difference between the purchase price and county limit, i.e. for a purchase price of $1,150,000 in Contra Costa County, the required down payment is approximately $25,000.
  • VA funding fee can be financed on top of the purchase price, so long as the county limit is not exceeded.
  • VA funding fee waived for veterans with any service connected disability rating. They are also eligible for tuition waivers for their children and public colleges and universities in California.
  • VA allows a no hassle streamline refinance (called an Interest Rate Reduction loan, or IRRL), with no appraisal, no income docs, etc. This could possibly be the easiest loan a borrower will ever do.
  • Only other difference for veterans compared to conventional is that VA requires an escrow account for property taxes and insurance, which makes budgeting easy.

It’s important to note that the VA does not “provide” loans. VA only guarantees the loans and protects the lender in case of default with a 25% equity guarantee.  That 25% guarantee is what makes 100% financing possible without mortgage insurance and at a lower rate than a conventional loan.

Interested in learning more about how a VA loan can help you acquire the home you are looking for?  Give us a call at (925) 519-0794 or send over an email and we would be happy to answer any additional questions you may have.