Why do sellers dislike VA loans?

Why don't sellers like VA loans? Many sellers — and their real estate agents — don't like VA loans because they believe these mortgages make it harder to close or more expensive for the seller.

Do sellers prefer VA or conventional loan?

And home sellers often look more favorably on a conventional loan than a VA loan. “Conventional mortgages, however, require you to purchase private mortgage insurance if you are paying less than 20% down. And unlike VA loans, they usually require a down payment of 3% or more,” notes Nik Shah, CEO of Home. LLC.

Is VA loan good for sellers?

Over the last six years, VA loans have a higher average closing success rate than conventional mortgages, according to data from Ellie Mae. Getting to closing day is the goal for sellers and listing agents, and there isn't a safer bet than a VA buyer.

Why do sellers prefer conventional over VA?

Some agents advise home sellers to take conventional loan or cash offers, even if they are lower than VA offers, because those options are perceived as less hassle than VA loans.

What are the disadvantages of a seller accepting a VA loan?

Using a VA loan means you'll end up saving money both on the purchase and over the life of the loan. However, it does mean the person selling you the house will have to spend more to sell you the house. If you're worried about the seller denying your offer because you're using a VA loan, don't be.

Why are Sellers Are Rejecting FHA

Why is it so hard to buy a house with VA loan?

One key distinction is that VA loans require a property appraisal that can be more stringent than traditional appraisals, especially if some parts of the house aren't move-in ready. Wooley said that often leads to confusion.

Who pays closing costs on a VA loan?

When using a VA loan, the buyer, seller, and lender each pay different parts of the closing costs. The seller cannot pay more than 4% of the total home loan in closing costs. However, their portion of the closing costs includes the commissions for buyer and seller real estate agents.

What sellers need to know about VA loans?

And, for sellers, the most important thing to understand about VA loans is how good of a mortgage product they are for qualified borrowers. This high-quality nature means that, if dealing with a veteran buyer, he or she will likely use the VA loan.

Are VA loans picky?

In issuing a VA loan, a lender can choose to add any number of property restrictions. Some lenders are extremely strict, while others are more accommodating. For example, while the VA allows mobile home purchases through the VA loan program, many lenders refuse to extend financing on these properties.

Can a seller discriminate against a VA loan?

In short, yes. There are plenty of laws that ban discrimination in housing on many grounds. But none of them covers mortgage types. So a seller might choose an offer with another mortgage type, like a conventional loan, over a VA loan if they wish.

What will fail a VA inspection?

What will fail a VA appraisal? If a home fails to meet the VA's Minimum Property Requirements (MPRs), the home will fail the VA appraisal. MPRs ensure the home is move-in ready so veterans won't face a long list of expensive repairs after closing on the home.

What does seller pay on a VA loan?

The VA does allow for seller concessions on VA loans, but their rules state that the seller can only contribute up to 4% of the purchase price or appraised value of the property. For example, if a home is appraised at $200,000 value, the concessions cannot exceed $8,000 ($200,000 x 4%).

Are VA home appraisals low?

Like any other type of appraisal, VA appraisals can come in lower than you expected. The unfortunate reality is that some homes are overpriced by the seller. According to Fannie Mae, appraisals come in low around 8% of the time. With that, borrowers seeking a VA loan may find their appraisal comes in low.

Will VA loan more than appraised value?

A VA loan can't be issued for more than the appraisal value, so a low appraisal can send buyers scrambling. Consider these three strategies for handling a low appraisal value: Strategy 1: Ask the seller for a price reduction. Let the seller know the appraisal value came in below the sales price.

Is a VA loan really no money down?

No down payment, no mortgage insurance

These are perhaps the biggest advantages to a VA loan. You don't need a down payment. None whatsoever. Most mortgage programs, such as FHA and conventional loans, require at least 3.5 percent to five percent down.

How often are VA loans denied in underwriting?

About 15% of VA loan applications get denied, so if your's isn't approved, you're not alone. If you're denied during the automated underwriting stage, you may be able to seek approval through manual underwriting.

How long does a VA loan take to close?

Most VA loans close in 40 to 50 days, which is standard for the mortgage industry regardless of the type of financing. In fact, dig into the numbers a bit and you don't find much difference between VA and conventional loans.

Can a Realtor charge a transaction fee on a VA loan?

Fees or commissions charged by a real estate agent or broker in connection with a VA loan may not be charged to or paid by the veteran-purchaser.

Are VA loans harder to close?

For all purchases, according to Ellie Mae, 74.3 percent of VA loans closed, compared to 74.1 percent of all mortgages. Conventional (non-government did slightly better than VA, with a 75.2 percent closure rate. In short, VA mortgages will close at a high rate and are less likely than the average loan to fail to close.

How soon can you sell a house after buying it VA loan?

With VA-guaranteed mortgages, there's typically no requirement for how long you have to live in the home before selling. VA loans also don't have any prepayment penalties (a fee if you end your mortgage early), so there's no need to worry about that if you're considering selling your home.

How fast can you close on a house VA loan?

It is possible to close on a VA loan in as little as 30 days. This makes buying a home with a VA loan just as fast as a traditional mortgage. The key to a fast closing lies in making sure you have everything you need to speed things along.

What closing costs are not allowed on a VA loan?

The 1 Percent Fee

If your lender is charging the flat fee, there's a host of things you cannot pay for, including: Loan application or processing fees. Interest rate lock-in fees. Document preparation fees.

What is VA funding fee 2021?

2021 VA Funding Fees For Purchase And Construction Loans

For cash-out or regular mortgage refinance, first-time borrowers will pay a 2.3% funding fee, while subsequent borrowers pay 3.6%.

How much is a VA funding fee 2022?

VA funding fees in 2022

Most veterans will pay a 2.3 percent funding fee when buying a home. This is equal to $2,300 for every $100,000 borrowed. This one-time fee applies to the most popular type of VA loan benefit: a mortgage loan with no down payment.