It is December and it's still a hot real estate market for sellers. This past year we have experienced an unprecedented lack of real estate inventory available for sale leaving pent-up buyer demand. Houses are selling in record time and prices have risen at unbelievable rates; homeowners are experiencing nice increases in home values. Buyers lost out on homes because of other buyers and investors paying cash. Often times, sellers were only accepting buyers who were qualifying for a conventional mortgage and had a down payment of 20% or more.
The market is showing early signs of balancing out. It is predicted that interest rates will rise a bit and price increases will return to a more conservative three to five percent year-over-year increase next year. Sellers may have to keep their minds open to buyers who are not going the conventional mortgage loan with a considerable down payment route. In the past, Veterans Affairs (VA) loans had a reputation of requiring extra hurdles and taking a long time to be approved. Today's VA Loans are better than they were years ago. Sellers should be happy with VA loan buyers.
VA Loan Requirements
First of all, a buyer can only get a VA loan if they are eligible. They must be a qualifying veteran of the United States armed forces. The list of qualifications can be found on the website www.va.gov. Surviving spouses of veterans may be eligible for VA loans as well. The home being purchased must be the buyer's primary residence. VA loans are a little more lenient when it comes to credit scores and they also don't require a down payment. Sometimes the closing costs can be less than with a conventional mortgage loan.
Faster VA Loan Approvals
The first change with Veterans Affairs loans is that VA approved buyers are able to be approved faster than ever before. A VA loan is backed by the United States Department of Veterans Affairs. If a VA lender states that a buyer is approved for a VA loan, there should be no question. Sellers should feel confident that their buyers will be fully approved and ready to close in no time. Once a VA-eligible borrower receives a Certificate of Eligibility (COE,) the lender will gather proof of income, other required documents and credit score. The loan process will then move swiftly towards appraisal and underwriting. Closings do not typically take longer with VA loans than they do with conventional loans nowadays.
VA Home Appraisals
VA home appraisals are required for homes that are being purchased by VA home buyers. In the recent market, many conventional home buyers were waiving appraisals. Some sellers may think this is one downfall of VA home loans. However, if sellers' home values are in line with their listing prices, there shouldn't be a problem with the VA appraisals at all.
No Private Mortgage Insurance or Maximum Loan Amount
Another advantage of VA home loans is that the buyers do not have to pay any private mortgage insurance (PMI.) PMI is required of conventional home loan buyers who do not put at least 20% down. There is also no maximum loan amount with a VA home loan. Some conventional buyers encounter trouble with the conventional maximum loan limit.
All in all, today's VA home buyers are very qualified home buyers. Sellers should feel confident with VA home loan buyers.
