Military homebuyers nationwide are getting squeezed out of the foreclosure market by a combination of the VA’s strict property and purchase requirements and a crush of cash buyers.
VA home loans have helped more than 18 million veterans and their families purchase homes since World War II. These low-cost loans do not require a down payment or private mortgage insurance – but the VA features a more stringent appraisal process than most conventional loans.
That greater degree of scrutiny is hurting some veterans looking to purchase foreclosed properties. Termite work and other major repairs must be completed before escrow closes, and VA loans can sometimes take more time to close than other loan types. Other times, veterans cannot purchase a property because it fails to meet the VA’s basic requirements – homes typically can’t be in need of major repairs prior to moving in.
Buyers looking to unload an as-is property are usually looking for speed and efficiency. In many cases, they’re turning to cash buyers, who can swoop in without the need for appraisal.
Simply put, many sellers believe there are few potential headaches with conventional and even FHA loans. And that leaves veterans and their families in some parts of the country on the losing end of a growing problem.
“It’s very frustrating and disheartening,” Jessica Donigan, of Gary Kent Homes & Estates-Re/Max Associates, told the San Diego Union-Tribune. “I’ve heard a lot of vets say they feel they’re being discriminated against, that it’s not fair.”
There are some steps veterans and their families can take to ensure their VA loan benefits are fully utilized. Here are a few:
-Know What You’re Up Against
The VA doesn’t hide any of its requirements or criteria. Veterans can pore over the VA Lender’s Handbook to get an in-depth look at the minimum property requirements, appraisal standards and property eligibility criteria.
-Find a Good Agent
This is true for any homebuying situation, but savvy, veteran agents can help make a difference for veterans. They can keep a close eye on Multiple Listing Service descriptions that appear discriminatory or at least unfavorable to veterans and VA loans, saving both time and money. Find out the VA loan limit in your area with any VA Loan Calculator on the web.
-Exhaust Your Options
Not all sellers are equal, so don’t necessarily rule out foreclosed properties altogether. But veterans should also be mindful to focus on more than one property and scour their target community for the best deals in light of potential letdown.
-Don’t Give Up on the VA
The VA home loan program is still among the most significant on the market. The financial and lifestyle benefits of VA loans still far outweigh the possible negatives. Besides that, veterans have earned these benefits through service to our country. Dedicated brokers, real estate agents and other industry officials remain steadfast in their commitment to serving this deserving demographic.
