Question: A friend told me that the VA loan is more expensive to use than conventional financing.
Is that true??

Answer: NO. The VA loan is a wonderful loan for eligible home buyers to use. It permits a "NO DOWN PAYMENT" loan at competitive rates. It is also a loan type that permits home sellers to pay part or all of the VA buyers' closing costs.

Question: Do all home sellers accept contracts from buyers using VA loans?

Answer: NO. The appraisal guidelines for VA loans requires that the appraiser have comparable SOLD homes for pricing that have also had government backed - VA or FHA financing. If all of the homes in the area of the home under contract were financed using conventional financing, it may be difficult to get an appraisal for the seller's price. This is done to protect the VA buyer. Unfortunately, it also may make it difficult for some VA buyers in rapidly appreciating real estate markets like Maryland and Northern Virgina, to use their VA loan. If a seller can sell their home for more money to a buyer using conventional financing, they will usually do so.

Question: I am interested in buying a new home and have found one that is priced just above the NO DOWN PAYMENT VA loan limit. Can I still buy the home?

Answer: YES. The VA loan has one limit for NO DOWN PAYMENT and a higher limit for homes priced above the limit where the VA borrower can use a down payment of 25% of the amount over the NO DOWN PAYMENT limit to the higher limit. This is a good plan, but often conventional financing is easier. The value of this loan would be that the seller could pay more of the VA buyer's closing costs.

Question: I have heard that the VA loan is assumable? Is this helpful in determining to use my VA Eligibility?

Answer: YES. Especially if you only plan to stay in the home for a short period of time. You may sell your home to an assumption buyer who will pay you money for your equity, if any, and assume the balance of your mortgage and your mortgage payments. VA loans and FHA loans are still assumable, although the new buyer will have to qualify.

Question: What do I need to use my VA elibibility?

Answer: You will need to obtain a CERTIFICATE OF ELIGIBILITY from the Veterans Administration. If you are active duty, your CO will have the forms and procedures. If you are retired or former active duty, you will need your DD-214 or Discharge papers to apply for the Certificate. You must use the VA Form 26-1880 to request the Certificate.

Good luck and happy home hunting. If you have any questions about using your VA eligibility to buy a home, contact us and we'll get the answer for you.