I'm an Army brat married to an Army veteran, so our story today on VA loans hits close to home. The issue is that in a competitive market, the perceived hassle/long timeline of a VA loan causes real estate agents to de-prioritize them as they advise home sellers. If a seller gets multiple offers, the agent is likely to put the VA loan on the very bottom of the stack, making it even more difficult for vets to get a house.
"They're locked out right now," said Sam Elder, a mortgage consultant at First United Bank. "It's the listing agent's responsibility to recommend offers to their client and so the listing agent is putting themselves out there. They have nothing to gain by suggesting an inferior offer."
But the perception that VA loans are inferior can be a holdover from a different time. "Some listings agents associate the low down payment with the terms offered to subprime borrowers in the years before the great financial crisis. That association is particularly prevalent with agents who were selling homes during those years," said Ryan Leahy, sales manager at Mortgage Network.
Getting a fast, accurate appraisal for any property is a pain point right now, but the VA appraisal does come with its own challenges. I found this out firsthand when we applied for a VA loan for our current house and everyone involved had the same warning: it was going to be a nightmare.
But, because we were buying from the builder and there were no other offers, everyone just had to be patient. And, unlike in the current market, we didn't have to worry about an appraisal gap. As Leahy noted: "The concern is that if you have a no-money-down VA loan and the value appraises short of what you're willing to pay for the home, that can cause the whole deal to go south."
"The reason we would do a VA loan is because it's better; it's a benefit they've earned," said one LO. "Then they find out none of the sellers are accepting them." HW+ Premium Content
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