Home Selling in West Chester>Question Details

Dolores, Both Buyer and Seller in West Chester, PA

Is there any advantage for a seller to accept a buyer who is using a va loan? What are the disadvantages?

Asked by Dolores, West Chester, PA Wed Jan 19, 2011

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As long as a buyer is preapproved with a lender, that's an advantage. Va loan appraisals are alittle more strict, so you dont want to have peeling paint, decks without railings, etc. Dont hesitate to contact me if you would like more information

Thank you

Daneen Jacquot, Broker/owner
South Dakota Real Estate Company
1211 Mount Rushmore Rd
Rapid City SD 57701
605-484-7832
605-342-1810
0 votes Thank Flag Link Wed Jan 19, 2011
> Loan limits and overlays – While the VA imposes no loan limits and no minimum credit scores, and doesn't require an appraisal for a streamline refinance program, most lenders do. These additional requirements are called “overlays.” By law, VA lenders cannot have guidelines that are less strict than those set out by the Department of Veterans Affairs – but they can be more strict.

Why would lenders, which are protected from losses by the government's guaranty, make it harder to get VA mortgages? Because they are afraid of losing their VA approval.

If lenders experience higher-than-usual defaults of their VA loans, they could lose their VA approved status, even if they always follow VA guidelines. To be safe, they tighten up guidelines to reduce the chance of high default rates.

> Funding fee increases if you use your eligibility more than once. You can use and re-use your VA home loan benefit. However, after the first time, it gets more expensive to do so. For example, in 2012, if you're a veteran buying a home with zero down, and you're using your mortgage benefit for the first time, your funding fee is 1.4 percent.

If it's your second time using a VA mortgage, your funding fee is 2.8 percent. The fees are slated to drop a bit after October 2012, and again in October 2013.

> Sellers don’t always like VA loans. If you want to take advantage of poor housing market conditions and buy a short sale property or foreclosure property, you may have trouble getting your offer approved if you require VA financing.

In addition, almost every seller and real estate agents require buyers to put a substantial deposit (referred to as “earnest money”) into escrow if they accept a buyer’s offer – the fact that you plan to use VA financing doesn’t matter.

Redirect Link:http://valoanguidelines.org/funding-fees-pmi/
1 vote Thank Flag Link Thu May 14, 2015
> Loan limits and overlays – While the VA imposes no loan limits and no minimum credit scores, and doesn't require an appraisal for a streamline refinance program, most lenders do. These additional requirements are called “overlays.” By law, VA lenders cannot have guidelines that are less strict than those set out by the Department of Veterans Affairs – but they can be more strict.

Why would lenders, which are protected from losses by the government's guaranty, make it harder to get VA mortgages? Because they are afraid of losing their VA approval.

If lenders experience higher-than-usual defaults of their VA loans, they could lose their VA approved status, even if they always follow VA guidelines. To be safe, they tighten up guidelines to reduce the chance of high default rates.

> Funding fee increases if you use your eligibility more than once. You can use and re-use your VA home loan benefit. However, after the first time, it gets more expensive to do so. For example, in 2012, if you're a veteran buying a home with zero down, and you're using your mortgage benefit for the first time, your funding fee is 1.4 percent.

If it's your second time using a VA mortgage, your funding fee is 2.8 percent. The fees are slated to drop a bit after October 2012, and again in October 2013.

> Sellers don’t always like VA loans. If you want to take advantage of poor housing market conditions and buy a short sale property or foreclosure property, you may have trouble getting your offer approved if you require VA financing.

In addition, almost every seller and real estate agents require buyers to put a substantial deposit (referred to as “earnest money”) into escrow if they accept a buyer’s offer – the fact that you plan to use VA financing doesn’t matter.

Redirect Link:http://valoanguidelines.org/funding-fees-pmi/
1 vote Thank Flag Link Thu May 14, 2015
• Difficult Sellers - Sellers can be more hesitant to sell their home to a buyer who is financing the purchase with a VA loan, due to the strict conditions that come along with these loans. Since there is a limit to what fees can be charged to the buyer using a VA Loan, a seller could find themselves being forced to pay more at

A strict home inspection and appraisal process often can make it impossible to buy a home “as is.” If the seller won’t agree to repairs, either done in advance of settlement or by putting money into an escrow account, a VA loan may not be approved. Of course, this should be in the advantage category really, as it is there to protect the veteran from purchasing a “lemon” or “money pit” home that could cost thousands. Conventional loans don’t have this kind of protection. I personally found out the hard way when I got a conventional loan to purchase my house and since have put in THOUSANDS of dollars in repairs that the inspector my realtor recommended didn’t catch. I’ll talk more about this in a separate post.

If you are hoping to acquire a VA loan, give it a try today and take the first step toward a smart mortgage - http://vastreamlinemortgage.net/va-mortgage-loan-advantages-…
1 vote Thank Flag Link Thu Apr 30, 2015
HI Dolores, I would encourage you to consider selling to someone who has served our country. There were times in the past when the VA inspection and appraisal were a little harder to get through for the seller. No longer. And sometimes the buyer does ask the seller for a concession or help with his closing costs. To do that, the house has to appraise higher than it might otherwise have. But, buyers ask for concessions on transactions that have nothing to do with VA loans, also. Looks like you may have sold by now, but if there is anything I can do to assist, it would be my pleasure. I have personally bought a home with VA, and also acted as both a listing agent and a buyer agent on VA transactions. Contact me by cell for a no obligation consultation. Brenda
1 vote Thank Flag Link Tue Mar 18, 2014
If the buyer is fully qualified through VA, go for it. Your selling agent can contact the potential lender to confirm. VA inspections have eased dramatically. Don't let a buyer escape in todays market. VA also helps our returning veterans, and this is a good thing.
Jim Bushong, Long and Foster, West Chester, PA
610-659-2999
Web Reference: http://jimbushong.lnfre.com
1 vote Thank Flag Link Thu Jan 20, 2011
Dolores

The VA loan is just another vehicle for a buyer to secure financing and for those buyers who have served our country. I have a seller presently who accepted a buyer with a VA loan and it is fairly transparent. My seller's only concern was the 100% financing and the transaction may take a little more time. The 100% financing was only a concern due to the appraisal on the property.
I have benn in this profession for many years and back in the early years VA loans were a little tricky due to the requirements placed on the sellers for repairs/improvements to make the loan go through. But I see no disadvantages presently.
Good luck with your research
Ed Tedeschi, Weichert Realtors-West Chester
Cell 484-354-0453
1 vote Thank Flag Link Thu Jan 20, 2011
Dolores the advantages to buyers who are using a VA loan is the fact that this program is a reward to those who have served in the military and underwriting guidelines are a bit more lenient than other loan programs. They want the veteran to be able to use the program if they want.
Disadvantages are as Daneen stated. The appraisal will note any repairs that have to be done on the home. Sometimes those repairs will have to be taken care of before they will allow the borrower to close
1 vote Thank Flag Link Wed Jan 19, 2011
From the seller's perspective, a VA loan is as secure as any loan. The VA will allow seller assistance so be aware. And a VA inspector may be more cautious, however, a seller should not be concerned about what time of loan is secured, as long as the buyer is pre-qualified.
0 votes Thank Flag Link Tue May 5, 2015
There is an advantage morally to sell to someone who has served to protect your freedom. Otherwise the inspections are not overly strict, so you may not notice much of a difference. If they are qualified there is no real disadvantage.
0 votes Thank Flag Link Tue Mar 18, 2014
I am reading the answers of others. What is not explained is that a 0 down payment for the veteran is great ( my husband is a vet)., but you need to be aware that in your closing paperwork monies are deducted from the seller. In essence, you are making the down payment for the buyer (Vet). A friend of mine sold his home and was not told until closing while going over the costs that $8500 was being deducted from his funds in conjunction with a Veterans loan. The buyer said " I can buy another house if we don't have a deal" and was ready to leave the table. Unfortunately, my friend had not choice as they purchased another home. All pieces of the transaction must be made clear.
0 votes Thank Flag Link Tue Feb 25, 2014
VA loans are usually 100% financing. There is no down payment. The seller does not need to pay anything for the buyer. However, they can contribute if they want to. Your friend seems confused.
Flag Thu Jun 26, 2014
I have used My VA and helped dozens of clients use their VA and sellers sell to Vets. At no time since my first experience in 1981 have I known of a Seller requirement to pay a single dollar in down payment. If your friend had a legit expense that high it was not because of the type loan but something else. If that appears to be the case. Please forward any closing docs that imply a seller was allowed to pay down the loan at closing to your states Attorney General. There is something wrong there that has little to do with the loan being a VA backed loan. Miss information and fraud against the system does and has hurt Vets ability to use this and other earned benefits.
I would like some experienced loan officers to weight in here.
Flag Tue Feb 25, 2014
Hi Dolores,

No major disadvantages. The inspection process is much smoother than it had been in the past, and the financing opens the door to many buyers who would have difficulty with conventional financing.

As long as the home is in good condition and you have agreed upon a fair price for the home, you should not have any significant obstacles.

And...lets not forget that the VA Financing program assists our veterans with home ownership.

Good Luck!
0 votes Thank Flag Link Thu Jan 20, 2011
Hello Dolores,

No significant disadvantages. As for the appraisal, it will be no different than an FHA when it comes to safety issues. The buyer qualifies for 100% financing so that for you is an advantage as they do not have to verfiy down payment funds. I would not be concerned with the buyer just because it is a VA loan.

Best Regards,
Alan Openshaw
Cornerstone Lending Inc
720 Second St Pike Suite 104
Southampton Pa 18966
Office 215 953 0800
Fax 215 953 1706
Cell 267 992 7276
Voted Best of Bucks 2010
0 votes Thank Flag Link Thu Jan 20, 2011
The VA Loan is not a reward but part of the compensation package EARNED by those serving our country. They earn an Honorable discharge. Many believe because of the superior discipline and experience the veterans makes a better credit risk resulting in better terms and conditions. The appraisal is to protect the veteran and the banks investment. The lending guidelines have stricter rules for the lender. So if your buyer gets a VA approval I know as a realtor we are likely to close, as compared to a conventional where the certainty is less. Also as a seller you have someone who sets goals like buying and is less likely to walk away right before the deal closes.

If there is a downside? That would be; your home must be in fair repair or better.
As for the repairs that come up in these appraisals. The same rotten bare wood that reduces your appraisal on a conventional loan must be fixed.. These will not reduce the appraisal because the price is set the item must be corrected before closing on a VA, FHA, VHDA etc.
0 votes Thank Flag Link Thu Jan 20, 2011
When you sell a home in the current market conditions you should look for a couple of things. 1.The Buyer must be a qualified and preapproved Buyer. If a Buyer is preapproved for a VA Loan, an FHA loan or a conventional Loan and you can verify this by calling the lender then you have a Buyer. Some people will say that it takes longer for a VA loan and the property will be evaluated. Essentially, in any real estate contract, the property will always be evaluated with an "inspection" and more than likely there will be required repairs so as a Seller you should be prepared for that.
The second thing you should look at is does the Buyer want to Buy the house.
When someone is qualified and approved to Buy, and they really want your house, then you have a Buyer and that is a good thing.
I don't see any disadvantages.
0 votes Thank Flag Link Thu Jan 20, 2011
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