WBAB / WBLI COMMERCIAL
(Long Island, NY) After giving their all to help defend the American Dream that we all cherish so dearly, it’s only natural that when the men and women of our Armed Forces return from duty that they would want to grab hold of a little piece of the American Dream for themselves…and what could epitomize that dream more than owning your own home?
In order to help give back to the men and women who so selflessly served the United States, the government created the VA loan program in 1944, which is a mortgage loan guaranteed by the U.S. Department of Veterans Affairs (VA) designed to offer long-term financing to eligible American veterans. The basic intention of the VA direct home loan program is to supply home financing to eligible veterans in areas where private financing is not generally available and to help veterans purchase properties with no down payment.
While the VA loan program, in theory, is a sound one and a great gateway to achieving home ownership, there have been some bumps in the road over the years for veterans who have tried to utilize it effectively; most of those bumps have come in the form of realtors and banks who are leery to embrace the program for a variety of reasons, many of them seen as unfair by vets just seeking to build a life for themselves and their families, according to Militarytimes.com.
“Real estate markets in some areas have rebounded from the mortgage crisis of a few years ago to the point that houses are being snapped up quickly, with sellers receiving multiple offers. And because of some real or perceived problems with various aspects of VA loans, some sellers just don’t want to be bothered with them,” they said. “The reluctance to accept an offer involving a VA loan may relate to a perception in the lending and real estate industries that VA loans take longer to process; but the reality is that the lending market has shifted in such a way that many traditional loans require even more documentation. Meanwhile, VA has made changes to speed up its processes. The result: VA loans are closing faster than some other loans.”
Nonetheless, Militarytimes.com said, this perceived issue, although not actually an issue, is nonetheless causing many realtors to flat-out reject families using VA loans simply because they want their commissions on the sale of the home in question that much faster; in addition, Militarytimes.com said, another misconception is that the Minimum Property Requirements (MPR) as related to the condition of a prospective home is far more stringent when it comes to VA regulations.
“Sellers are concerned that VA appraisers are more picky… that there will be repairs required,” they said. “But it’s hit or miss with all appraisals, including those for conventional loans. If there are problems with appraisals, the buyer’s real estate agent can contact VA officials.”
Misconceptions such as these amongst realtors and banks are simply the tip of the iceberg; whereas many view the use of VA loans as a long, difficult, and perhaps even unreliable process, which is simply not the case, according to an article by the Huffington Post.
“Despite banks’ concerns, however, VA-backed mortgages actually have a lower failure rate than sub-prime, FHA-insured, or even prime loans; only about four percent of VA loans go into default, compared to 29, seven, and five percent for the other loans, respectively,” they said. “Realtors have shown veterans homes that they were eventually denied, and it’s very frustrating and disheartening…vets say they feel they’re being discriminated against, that it’s not fair.”
That situations such as this still exist is certainly surprising, as recent reports have confirmed that an upswing in the purchase of homes has come about in part to the fact that veterans are taking advantage of the VA loan program in numbers that represent a startling 20-year high.
To get a “local perspective” we spoke to broker owner Michael Keegan of Keystone Realty USA, located in East Northport, Long Island, who didn’t see the situation being a problem, “Having a buyer who is interested in purchasing a home with a VA loan, for our office, is rare, but typically, our agents, and we have over 200 of them throughout Long Island, do not care were the buyers financing is coming from, they just expect them to have their pre-approval ready to go.” Keegan said. “So whether, a loan is going to be a conventional loan, an FHA loan, or a VA loan doesn’t matter, the buyer should be pre-qualified, and if it’s a VA loan, then they should have – ready to go – at minimum, their Certificate of Eligibility.”
In order to increase chances of getting your offer accepted with a VA loan, we reached out to our own VA Loan expert for advice that prospective shoppers can use in the hopes of turning the tide in their favor.
Ensuring that buyers, sellers, and agents are all educated in the strengths, weaknesses, myths, and realities of the VA loan program will ensure that many of the unfair and underserved stigmas that are associated with the process will be removed, opening the door to home ownership for many selfless veterans and their families for years to come.
In addition to these tips, both Nassau and Suffolk County have agencies where veterans can ask questions and get information on what benefits they may be entitled to.