Remember MythBusters? It was one of those TV shows my family looked forward to watching week after week. We saw the “Demolition Derby” episode so many times, we could recite it word-for-word.
With MythBusters, deciding whether we wanted to see an old wives’ tale confirmed or blown out of the water was hard. A lot of the time, we were just waiting for Adam Savage to strap explosives to random objects. The drama was half the fun.
But as a realtor in Destin, when it comes to home-buying myths, the fireworks are unnecessary. I simply want buyers to be able to distinguish fact from fiction — especially if they’re utilizing a VA loan.
There are so many myths about purchasing a home as a veteran. And people tend to believe them.
For instance, buyers utilizing a VA loan think they need perfect credit to be approved.
While the VA encourages approved lenders to provide VA loans to all qualified applicants, it does not describe a minimum credit score. Each lender has its own credit requirements, which they use to verify that borrowers meet the ability to repay the loan. Lenders must use good judgment and flexibility when applying the VA’s underwriting recommendations for credit, debt, and income.
Typically, a score in the 620s or better is needed to apply for a VA loan. That’s far from perfect. *whips out steel sign* Busted.
Another VA myth floating around is that only combat veterans are eligible. What?! Many can utilize a VA loan, including military veterans, active duty service members, surviving spouses, cadets, NOAA officers, and PHS officers.
To obtain your certificate of eligibility (COE), you can use an online COE tool. In other words — *steel sign* — busted.
The third myth I hear all the time is that you can only use the VA home loan benefit once. This is false.
If you earn a VA home loan benefit, it is yours for life, and in some cases, it can be used multiple times at once. Many veterans use it again and again for their home financing needs.
You can use it to buy that starter home and then use it again to upgrade to a larger home for your growing family. And you can use it again to refinance your property for a lower interest rate or get cash out of your home’s equity.
Depending on the value of each property you buy, you may or may not need to restore entitlement to reuse your benefit. But as long as you have enough entitlement to back your loan, a VA loan can be a great mortgage choice for all stages of life.
*dances around with steel sign* Busted.
But there’s more. People often think VA loans can only be used to buy single-family houses. This is a tragedy because frankly, the sky’s the limit!
You can use your VA loan to buy a single-family home, a condominium unit in a VA-approved complex, or a multi-family property (up to four units). You can also use it to build a home, buy and improve a property, make energy-efficient upgrades, and more.
*singing* Busted.
In my experience, something else people worry about is the unexpected costs associated with VA loans. Except, like all the others above, this is a myth.
VA loans are known for their benefits, including no private mortgage insurance and, in most cases, zero down payments.
Think it’s too good to be true? The VA itself says that about 90% of all VA purchases have been made with no down payment since the program’s inception.
As far as other out-of-pocket costs go, you should receive a good faith estimate from your lender. And there should be no surprise fees at closing time.
You can expect to pay a VA funding fee (unless exempt), an appraisal fee, an origination fee, title fees, and some other costs approved by the VA. You can pay these fees upfront or possibly roll some of them into your loan if there is enough room between the purchase price and the appraisal.
Another option may be for you to negotiate seller-paid fees in your purchase contract. With VA financing, a seller can agree to pay all closing costs and up to 4% concessions.
You know the drill. *holds up steel sign* Busted.
Finally, the worst myth I’ve heard regarding VA loans is that buyers pay for the agent’s commission. Ugh.
Not only is this false, but it’s illegal for VA buyers to pay an agent’s commission. The commission is paid from the seller’s side of the transaction to both the seller’s agent and the buyer’s agent. The buyer pays nothing; therefore, it is extremely beneficial for a buyer to hire an agent who is well-versed in the home-buying process.
Say it with me: busted.
A VA loan can be a great option for borrowers who qualify, so if you’d like to learn more about your situation, reach out. I’d love to chat with you (and blow up any other myths if necessary).