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Module 3 Discussion: VA Financing
  • 1. Have you worked with clients who have had misconceptions of VA financing? If so, how did you help them understand the facts? What do you think some of the challenges are of understanding VA financing?

    After you have posted to this discussion, review your colleagues’ comments and reply to at least one other post.
  • One of the biggest issues is helping them understand no equity if they put 0 down. At the time, it may not matter but when they have to sell, it does.
  • I have not worked with clients using VA loan. Some of the challenges are explaining that VA isn't backing you 100%. You can't just do what you want. You still need a lender.
  • I find that most people that I speak to about VA loans understand that the "no down payment benefit" and from there assume that means no closing costs at all.
  • We used to think that we could only use the VA Loan only once and that we would not be approved for very much. On both accounts we found out these were not true by looking up information and working with a great lender!
  • VA financing is different than conventional financing. Property Inspections are not required for a VA loan.

    Most lenders and Realtors are not knowledgeable of the VA loan process.
  • I agree, money down is helpful when building equity. Showing the client the difference between that and zero down in an amort schedule helps bring that to light. Also, budgeting classes are available online , at Churches and on base.
  • I worked with multiple VA financing buyers and a few were not aware there was a VA funding fee that would be financed into the loan. I made sure that the Lender was able to explain in detail what the options were.
  • The challenges would be how you are able to use your va loan more than once, or the ability to have a loan out using your va and still able to purchase another house with your va. (It makes sense in my head but I don't think i wording it right, hence why I always have them talk to a local lender who is very knowledgeable about va loans.)
  • Have you worked with clients who have had misconceptions of VA financing? If so, how did you help them understand the facts? What do you think some of the challenges are of understanding VA financing?

    The funding fee is most often misunderstood. When clients aren't working with the best lenders, sometimes this isn't explained to them. They end up caught off guard thinking that since a VA loan is "0 down" that also means "0 closing costs". The biggest challenge is finding a lender who will explain all of this to the buyers in language that they can understand.
  • Haven't had issues with VA buyers understanding the process. I have had good lenders to make sure their are no misunderstandings.
  • I've worked with quite a few vets. I cannot recall any having any major misconceptions regarding their financing. Some are not aware of the funding fee, which is sizable.
  • I worked with one family who ended up not using a VA loan after talking to a lender. They did not know there was a VA funding fee that would be financed into the loan, the Lender was able to explain in detail what the options were.
  • I have not worked with someone using a VA yet. In reading the above comments making sure they understand the backing, zero down, and funding fees will be paramount.
  • Being a disabled US Army vet myself and obtaining and using my first VA loan recently there was a lot of things I did not understand. Having gone through the process it has set me up to explain it better to a new client and help them along the way.
  • I hook them up with VA Lender
  • No. I haven't but I would connect them to a VA lender to explain how a VA loan works.
  • Our largest market is the Military. I have a list of VA lenders in the area. Often Buyers come to me believing that VA is giving them the loan, not just backing it. My simplest explanation is the VA is like a co-signer.
    Sometimes it is difficult to explain that many lenders will give a VA loan, not just the VALOAN people on TV.
  • I have experienced working with the military when I was a loan officer. Many military active and retired are not aware that if they have a 10% disability or greater that they are waived from the MIP funding fee which is huge $$$.
  • I have had clients who are short of funds and did not know that the seller can give them up to 4% in closing costs if written in the client.
  • I have not had the pleasure of helping a VA client.
    A misconception I have heard is that they do not realize they can qualify for a VA loan even if they have not deployed.
  • The most common misconception that I get is that they think the VA benefit can be used only once.
  • I have yet to work with clients that would use a VA loan. I would like to be able to clearly explain the funding fee which I hear is quite a bit.
  • I have worked with VA clients a few times. Most have understood their entitlement and eligibility. If Not I put them in touch with a knowledgeable lender well versed in VA. Part of my job is to make sure the homes they and I select to look at are Va approved and will pass VA guidelines. The lender will help to determine the best financing options for the purchaser.
  • It's important to understand the amount of entitlement and the VA loan funding fee. For veterans with a service connected disability rating that meets requirements, the VA loan funding fee is waived.
  • I have had a mixed bag when it comes to the servicemen I have worked with. For one there was no surprise, for the rest the VA Funding Fee was the big surprise.

    I've done my best to explain the funding fee, and I have stressed that they need to talk
    to their loan officer to be sure they understand and if they don't to ask the loan officer again and again, and again, until they do understand.

    The challenges for understanding VA loans seem to mostly be around the funding fee, how it works, what determines your eligibility, how it gets paid.
  • Yes, although it's still early in my career. So far the most common misconception seems to be understanding that the VA is not the organization underwriting the loan. That they will still need to meet with a lender, and prequalify with a lender, not just the VA.

    So far the best answer to that seems to be explaining it in layman's terms, and then referring them to a lender.
  • Though I have worked with Veterans with VA loans no misconceptions.
  • I haven't worked with clients that have used VA financing. I can see there are many misconceptions out there about using VA. I will now be better prepared to help explain this info to military members active and retired..
  • No problems so far.
  • I have worked with clients that have VA financing, but they understood for the most part what went on and I actually have a meeting with all prospective buyers to discuss their different loan options etc. Having worked on the legal side of lending and real estate, I am able to impart some of my knowledge and help them through the entire process and I always ask information from my lenders to help me understand. When its something I don't know, I defer to the my team of lenders to find out the answer or have my client reach out to the lender to clarify.

    Some challenges is helping those using VA understand that there are still closing costs that would have to be paid that would require money from them. One of my preferred lenders was able to help a client only pay $1100 in closing costs.
  • I help my buyers by anticipating problems and asking the questions for them. To help with VA financing questions, I like to work with lenders who are always available for my buyers. I have them on speed dial to answer and assist. Working with qualified cooperative partners helps me offer the best service. To do this effectively I use more than one VA lender because they do get tied up in their details and can't always respond.
  • The challenge is to explain that despite there being $0 money down, that doesn't mean that there won't be closing costs, as well as the VA funding fee that they still need to either be prepared to bring to the table, request the seller to pay some of those costs or find a lender that will absorb those fees & possibly roll the funding fee into the loan amount, so that they can truly bring $0 to the table at closing.
  • I make up books with a binder I use. I made a small book for VA financing explaining in plain English how it works. I also explain that I am not the lender and lay the responsibility of fully explaining VA loans in their direction.
  • If you are working with a buyer using a VA loan on a mobile with land, be sure to check
    that it has a recorded HCD Form 433A in the title records. The lender will require it. Note: not all mobiles on land have it.
    In California the 433A aka INSTALLATION OF A MANUFACTURED HOME ON A FOUNDATION SYSTEM and complies with California Code of Regulations, Title 25, Division 1, Chapter 2, Section 18551. This recorded document provides security to the lender, Title Company and the homeowner in two ways:
    1. It conjoins the manufactured home (personal property or chattel) with the land, thus establishing the home and land as a unitized piece of real property.
    2. Provides recorded proof that a State approved and engineered foundation has been installed on the home.
  • I have found that having a really good lender who has worked with VA financing really helps. They can do the best job at explaining the details and requirements of the loan which helps keep the jobs of lender and Realtor separated.
  • After speaking with a friend whose daughter served in the military for 2-3 years before being discharged with an injury, I realized that not everyone realizes that eligibility is not determined by active status alone. I think another challenge with VA financing is procuring the eligibility status for older veterans who may not be computer literate. The veteran would need to have trust that the agent could help him or her to procure the needed information.
  • Working with a great VA lender can make a tremendous difference! As my husband is now retired with a disability rating, I learned from this discussion that future funding fees will be waived.
  • VA Financing for Active-Duty VetsSales with VA Mortgage Assumption
    A benefit of a VA loan is the possibility of assumption by another eligible VA or any qualified borrower. During times of high interest rates and tight credit, an assumable mortgage can make a home more attractive to VA buyers.

    A veteran has to assume correct ? The way this reads is it points to any qualified borrower
  • When any buyer comes to me, i have a buyers book that i tell them it is there go to book, and we go thru different types of financing. I always ask the question are you a veteran or active service. I then talk about it, but then ask them if I can bring in a lender who will show them two types of financing, FHA, or Conv., and then Va. we all wait for the buyer to get comfortable and then help them with their questions.
  • I’m collaborating with lenders and giving a VA loan presentation to the local military and veteran community. We added the financing requirements:

    - Good condition: Has to meet the three S’s (Safe, Sound, Sanitary)

    - Additions: All additions must be completed in a workman manner

    - Termite clearance: A home cannot be financed until it receives termite clearance
  • The VA funding fee is often misunderstood. Especially when the entitlement has been used before and the second time it's used the funding fee is even more expensive. Just because this can be rolled into the mortgage doesn't mean it won't matter when the time comes to sell.
  • The rule of thumb among lenders is that the VA entitlement, or a combination of entitlement plus down payment and/or equity, must cover at least 25% of the loan. VA Funding Fee and other loans costs to your loan may result in a situation in which you owe more than the fair market value of the house, and will reduce the benefit of refinancing since your payment will not be lowered as much as it could be. Also, you could have difficulty selling the house for enough to pay off your loan balance.
  • some misconceptions of VA loans are that the VA will guarantee qualifications of a loan and VA financing can only be once. Va only guarantees the home loans made by private lending institutions, such as mortgage company, savings and loan, credit union or bank. A only stands behind a home loan made by the private lender by guaranteeing a portion of the loan
  • I worked with a couple who were both eligible for VA financing. The husband was active duty Coast Guard and the wife was retired Navy. They had used his certificate for their previous home but were unaware they were able to still use her certificate.. I connected them with a lender who was able to help them understand their benefits more thoroughly and they were very happy for the knowledge and guidance we both provided them.
  • I have not worked with any clients with VA loans. I would have them talk with a very knowledgeable lender who does a lot of VA loans and would be helpful in making sure the client's VA financing is processed and closed on time.
  • The misconceptions I have dealt with are with buyers thinking that they do not have to come to the closing table with any money and that they can ask the seller for the moon in concessions. I sit down with my clients and work to set their expectations and encourage them to ask questions when they are sitting with the lender.
  • Haven't worked with clients who were not aware of VA financing basics.
  • I'll echo what Elizabeth said. I have had more than one client believe that they didn't have to pay anything at closing.
  • No down payment doesn’t mean no closing costs, you have to educate your buyers
  • I have worked with clients who didn't understand that they could use the VA loan more than once. I also had clients who didn't know that they could keep their current home and still buy another as long as it met the proper criteria. I also make it a point to make sure I educate my buyers, not just VA on what all the costs are and what they're there for so that they aren't surprised when we start the process. It makes it much smoother.