Veterans, do you know about the benefits of buying a home with a VA loan? For example, you can purchase a home without any money down while mortgage insurance isn’t required. Your interest rate will also be lower as well compare to other loan programs. While this loan gives you the jump start on home financing, when you make an offer on your dream home it will be a bit trickier and more difficult than you expect since they work a bit differently than conventional loans. However, here are some ways to make the process smoother give you the leg up you deserve.
- Take a closer, detailed look on older homes – When you are buying with a VA loan, the home has to be approved by an appraiser no matter what. Unfortunately, the VA’s standers are a bit stricter than the standards for other home buyers on the market. The VA standards want to find you a good home that is in good contention. Because of this, many veterans tend to step away from historic homes. However, as long if the older house is in good, safe condition, an older house could pass for a VA loans. Avoid HUD and short sale properties because they may have been damaged or fallen into disrepair. However, if your heart is set on an older home, look for one that’s already been remodeled.
- Work our repair requests with the seller – You should look out for potential problems on the home, even if it’s a newer home. If the home needs minor repair, the seller does not have to make the repair. The seller could walk away and find someone else who would buy the house as is. And with a VA loan, the lender will not loan you the money to buy the house unless the repairs are made. For this reason, this is why when you choose a realtor to buy a home, make sure they understand the VA loan process. The buyer’s realtor can then explain to the listing agent what’s going on, and 9 out of 10 times the seller will get the repairs done. If that doesn’t work, then the buyer can also look to pay for the repairs themselves.
- Analysis of the market before you make an offer – Making an offer at a fair price is the key to getting the home of your dreams. However, what is fair? If you find a home you love, do you lowball your price and hope the seller approves instead of walk away or do you offer more than the VA is willing to approve and you need to come up with the cash to cover the home? So before you get into that scenario, do some homework of the area. Sometimes, older homes asking price are based on new homes that are being built a couple of miles away, which means the home that was built in the 1980’s are at the same price as a home that was built this year, and the appraiser might not agree with that price. The key to finding the “fair” price? Have your Realtor run a market analysis on homes that were recently sold in your area. If the asking price looks good to both the seller and appraiser’s evaluation, you will have an easier time to getting accepted and approved for the VA loan.
- Take a step back and think about the demands you are making to the seller – Sellers might believe in the myths about VA loans. They might hear that it takes a long time to close or that the seller will not make a profit. Although they are not true, VA buyers are still getting a bad image in general for the sellers. You should try to make your offer shine, especially if the market is competitive and the seller is having multiple offers. So for that reason, you might want to take a chill pill on your demands. For example, closing costs. It’s not uncommon for the buyer not to have enough cash to cover the closing costs and for the buyer to ask the seller to cover some of the costs. However, being in a competitive market, it will make you look bad especially with those myths floating around out there. If you are in that situation with a VA loan, try to put yourself in their shoes. Ask your realtor on how to word it to make it more appealing to the seller like they are getting something for free. However, if you do roll your closing costs in your loan, keep in mind the home will also need to appraise for the higher amount as well.
- Be creative and make you stand out above everyone else – Again, if you are in a competitive market, you should find ways to make yourself stand out above anyone else. For example, you can write a “love letter” to the seller telling them what you like about the house, why you are moving, etc. Sometimes the sellers are sentimental and they want to see their home go to someone else who will love the home as much as they did. Even if that doesn’t work, you know yourself you did everything you could to buy the house that will not only be accepted by the seller but also the VA loan as well too.
Veterans, do you have any other tips of the trade to buy the home of your dream? Let us know!