Va Homes & Va Financing – What You Need To Know

What Are VA Homes?

VA homes are owned by the VA, or Veteran's Administration. The previous mortgage on these homes were insured by the VA, so when the mortgage loan is defaulted on, the VA gets the title to the property. They can then re-sell it to another buyer. The one thing that many people don't know about VA properties is that anyone can buy them. You do not have to be military personnel or a veteran to purchase one of these houses as your own.

VA houses are offered for sale through an auction. A potential buyer must fill out the necessary forms and their real estate agent submits the forms to the VA before the auction period ends. If the house does not sell during the auction, then the house is simply offered for price that is usually close to the market value for the home, but is generally somewhat less than the market value. VA homes are sold "as is," which means that you will be responsible for any repairs or upgrades to the home.

The Pros and Cons of VA Financing

There are two types of VA financing. To get regular VA financing, a person must demonstrate their eligibility. Eligibility for VA financing means that you have served in the military at some point or are the surviving spouse of a military person.

Or, if you intend to buy a VA home and are a non-veteran, you can apply for VA Vendee financing, which has terms similar to VA loans.

VA financing offers excellent terms for those that are eligible. However, there are some pros and cons to VA financing.

Some of the great things about VA financing include the fact that you generally only have to put down a $500 earnest money deposit. With other types of real estate, your earnest money deposit is usually a percentage of the cost of the home, so $500 can be a real bargain. Another advantage to VA financing is there is usually a low or even no down payment required.

Other advantages to VA loans are that the closing costs are usually lower, and there are no mortgage insurance premiums to be paid. The interest rate is negotiable, and it is always comparable to the federal interest rate.

Some of the disadvantages to VA loans are that you must pay a VA loan funding fee, which is currently 2.25% of the value of the home. However, you can choose to finance the cost of this fee into your mortgage loan. A buyer who wants to get VA financing must have acceptable credit. You cannot have lousy credit and get a VA loan. However, your credit does not have to be perfect, either. Buyers must also be able to show the VA that they can afford to make their mortgage payments and still have the funds for necessary living costs. Basically, you need to have an acceptable debt to income ratio.

Other considerations include the fact that you must intend to live in the home. You can't buy it and then let someone else live in it. You must also maintain the home and keep it in good shape.

Talk To Your Real Estate Agent

It is helpful to find a real estate agent that has experience with VA loans if you are a veteran or with VA Vendee loans if you are not a veteran but want to buy a VA owned house and want to take advantage of VA financing. A good realtor will be able to help you fill out all the necessary paperwork and answer your questions regarding VA financing so that the process is not a stressful experience.