Destroying 3 Myths about the VA Loan Program in California

We are about to destroy 3 myths about the VA loan program in California. The VA loan program is the best benefit available to Veterans, allowing them to purchase a home with no down payment. And as of 2020, there are no VA loan limits tied to the allowance for no down payment purchases. On top of that, VA has very aggressive interest rates and no monthly mortgage insurance. Even with these huge advantages there continue to be myths about the VA loan program that can make it tough to get an offer to buy a home accepted.

Myth #1 : VA Loans Take to Long to Close   -  FALSE

This depends on the experience of the lender, but if you're working with a California VA loan specialist then a VA loan can close very quickly. It all depends on the internal process of the lender and the initial prequalification of the borrower. Some lenders will even do a "fully underwritten PreApproval" prior to the offer being made. This is always the preferred method of VA loan PreApproval, but not all lenders will go through the extra step of actually have an underwriter review the initial loan package. If you go with a lender who has fully underwritten your loan package prior to making an offer, then you will be in a very strong position to not only get your offer accepted, but also to close very quickly. The only item you'll be waiting on is the VA appraisal. A good VA lender should be able to issue a "Clear to Close" in as little as 15 days from the day of your accepted offer.

Myth #2: VA Loans Cost the Seller More  - FALSE

Accepting a VA offer does not cost the seller anything that would be different from any other offer. This myth stems from the idea that with a VA loan there are "non-allowable" closing costs, or closing costs the buyer is not allowed to pay. What someone who believes this myth to be true doesn't understand is that even fees that are on this list CAN BE PAID by the Veteran as long as the total amount of these fees are less than 1% of the VA loan amount. In California, where home prices tend to be higher than other parts of the country, and where most VA purchase loans tend to be with $0 down payment, 1% is a big number and more than covers these "non-allowable" fees. Most typical closing costs are not included in the calculation. For example, title insurance fees, loan discount fees, and the the appraisal fee are not included in the 1% calculation. A Veteran using the VA loan program in California can even pay for the required termite inspection report and can pay for any required repairs, just like with any other type of financing.

Myth #3: VA Loans are harder to close - FALSE

This may be true for some lenders, but again, this is where a California Veteran needs to make sure they are working with a lender AND loan officer who specializes in the VA loan program. A lender who specializes in the VA loan program will have more dedicated support and knowledge about the VA loan program that a lender who is a "jack of all trades". A California Loan Officer may run into one to three VA loans in a year. A California VA Loan Specialist may close more than 50 or even 100 VA loans in one year. The California VA Loan Specialist will have more knowledge about the VA loan program and will have seen many more scenarios and have solutions for almost any scenario versus a loan officer closing one to three VA loans in a year. So yes, a VA loan may be harder to close for some lenders, but if you are working with lender and loan officer who specialize in the VA loan program, then the VA loan program will be easier to close than other types of loan programs. Think about it. No down payment to verify. No max "debt to income" ratio to worry about. Very flexible underwriting requirements and FICO score requirements. It just easy.

3 myths about VA loan

Authored by Tim Storm, a California VA Loan Officer specializing in VA Loans. MLO 223456. – Please contact my office at Fairway Independent Mortgage Corporation NMLS 2289. My direct line is 714-478-3049. I will prepare custom VA loan scenarios that will be matched up to your financial goals, both long and short-term. I also prepare a Video Explanation of your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.

4 myths about the VA loan program

calmythsThe VA loan program is an amazing benefit for our veterans in California. Surprisingly, there are thousands of veterans in California that haven’t used the program because of some longstanding misconceptions about VA loans. Here is the truth behind 4 of the most popular myths regarding the VA loan program…

Myth #1: You need to have perfect credit for a VA loan.

Any credit limit (minimum FICO score) that a lender gives you for a VA loan is a lender imposed limit. The VA does not have specific credit requirements for loans so every lender is different. Most lenders will look for a credit score of at least 620, but some will go even lower, with some lenders going as low at 580. If the first California VA lender you try doesn’t accept your loan request it may be worth looking to see if you can find a California VA lender that will.

Myth #2: VA loans take longer to close than other loans

Many think that the VA loan process is a slow and cumbersome process. However, it has become much faster and a much more streamlined process. According to Ellie Mae, VA and conventional loans both on average close in about 44 days. But for a California lender who specializes in VA loan, even 44 days sounds long. Under 30 days is possible in most circumstances.  Also, VA loans are much more likely to close compared to conventional loans.

Myth #3: VA loans are much riskier

Since no down payment is needed for a VA loan many think it is a riskier loan. Even with no down payment, VA loans have the lowest foreclosure rate compared to any other conventional program. Other requirements like “residual income” help to solidify the safety of the VA program.

Myth #4: VA loans can only be used one time

This might be one of the biggest misconceptions about the VA loan program. There are many veterans that think this is only a one time perk or their eligibility expires after a certain period of time, but this is not true at all. VA loans are a lifelong benefit that can be used multiple times. Eligible veterans have a basic entitlement that represents their ability to use the program. As they pay off their first VA loan, that entitlement restores and are then able to use the VA program again. It is even possible to have more than one VA loan at a time. For example, in high cost counties like Orange County, CA, there is a “bonus entitlement”. The bonus entitlement allows a California Veteran to purchase another home with no down payment. For someone looking to see what their options are while still owning a home with VA financing a true California VA Loan Expert should be consulted.

Authored by Tim Storm, a California VA Loan Officer specializing in VA Loans. MLO 223456. – Please contact my office at the Home Point Financial. My direct line is 949-640-3102. I will prepare custom VA loan scenarios which will be matched up to your financial goals, both long and short term. I also prepare a Video Explanation of your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.