If you are selling your home and are willing to sell to VA borrowers, there are a few things you should know about VA loans. Contrary to popular belief, they aren’t hard to get approved and they don’t take forever to get closed. They are actually a very helpful way to help veterans buy a home.
Understanding how the process works and how it affects you as the seller can help take some of the confusion out of the process.
The VA Appraisal
The largest misconception many sellers have is the trouble they think they will have with a VA appraisal. If your home is in good condition, you have nothing to worry about. The appraisal is truly the same as any other lender/loan program would require. The one difference is the Minimum Property Requirements. The name might sound intimidating, but it’s really just a way for the VA to make sure the home is safe, sanitary, and livable.
Basically, if the home is in good condition you will be okay. If all electrical and plumbing systems work, the roof has at least a few years left on it, and there aren’t any visible hazards, the home will likely pass the MPRs. Don’t confuse the appraisal with an inspection. While the VA appraisal is slightly more in-depth than a regular appraisal, it’s not nearly as detailed as the inspection which any borrower could order whether it’s a VA loan or not.
Veterans Must Qualify
If you require a pre-approval letter from any lender, VA borrower or not, you can prevent a buyer from backing out at the last minute. Many sellers mistakenly think that VA borrowers are risky because they borrow 100% of the purchase price. They worry that the borrower will get turned down at the last minute and the seller will be left back at square one.
Just like borrowers have to qualify for any other loan, the same is true for the VA loan. While the underwriting requirements are a little flexible, they definitely help weed out the borrowers that truly cannot afford the home. In fact, because of the 100% down payment, sellers are almost in a better position because they know the borrower will have the funds. There aren’t any down payment funds the borrower needs to come up with.
Sellers Don’t Have to Pay the Veteran’s Closing Costs
Many sellers believe that have to pay the buyer’s closing costs because the VA doesn’t allow them to pay them. The truth is there are many closing costs the veteran can pay. While there are some fees the borrower cannot pay, the seller is not under any obligation to pay them. The borrower can negotiate with the real estate agent and the lender to get the fees paid.
In the end, it pays to open up your possibilities to VA borrowers. The market is filled with veterans that want to use their VA benefit. As a seller, you could be limiting your possibilities if you don’t allow buyers with VA financing. The program has come a long way and is right on par with many other programs. The loan doesn’t take any longer to close than any other loan program – the VA doesn’t even get involved in the approval process. In fact, it’s a great way to ensure 100% financing for the price you want for a home, assuming its value matches the purchase price.Click to See the Latest Mortgage Rates»