In many areas of the country the real estate markets have experienced inventory shortages, especially in major metropolitan areas˳ The seller, in many cases, will have several competing offers to choose from, in addition, it can be difficult for the veteran buyer to find a homeowner who will accept an offer using VA financing˳ Based on previous issues from veteran buyers, several strategies will be illustrated on how to make your VA offer as competitive as other types of financing, such as a Conventional or FHA offer˳ You may want to discuss your options with your loan officer in order to increase your chances of having your offer accepted˳
There are usually 5 main areas of concern:
1) Closing Costs
2) Misunderstanding of Mandatory Fees
3) VA Appraisal vs˳ Conventional Appraisal or FHA Appraisal
4) An Offer With More Money Looks More Attractive To A Seller
5) VA Offer Requires a Termite Clearance
These 5 issues will be further elaborated in this article˳ Understanding these 5 common areas of misconception will most likely increase your chances of achieving an accepted offer˳
Many veterans need help with their closing costs˳ In a seller’s market, rather than asking a seller to help pay your closings costs, it would behoove you to have your lender increase your interest rate, and request for a lender credit to cover the closing costs˳ In regard to additional fees, many agents have a misunderstanding that a seller would be responsible for mandatory fees˳
This group of fees include: escrow, processing and underwriting˳ The VA guidelines state that these fees are a seller’s responsibility when the lender is charging a 1 point loan origination, (which is rare in today’s lending environment)˳
This concern needs to be addressed, so that all parties have an accurate understanding of the VA guideline˳The VA appraisal has been commonly perceived as stricter than a Conventional or FHA appraisal˳ The most significant misinterpretation is that a VA appraiser may request for more repairs on the subject property˳ In today’s lending world, due to the stricter federal guidelines, Conventional, FHA or VA loan appraisals are all using similar standards˳
Many sellers believe a Conventional offer with 20% down payment appear to be a stronger offer than a VA loan with no down payment˳ The offer with the highest down payment is believed to have a higher probability of closing˳ If both buyers have been pre-approved by an experienced loan officer, and the borrower’s information has been pre-approved by Fannie Mae’s underwriting software, called Desktop Underwriting, then they both have the same probability of closing˳
The only area that the VA loan may have a slight disadvantage is that the VA requires a termite report and clearance, but Conventional and FHA loans do not˳ The VA guidelines allow you to pay for repairs, but not the report itself˳ You can offer to pay for the repairs if the report is available and you are aware of the costs˳ If the repairs are expensive and the seller elects to decline the repairs, it might be a house that you need to pass on˳
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