Home sellers and their agents may be limiting their potential base of buyers by ignoring a growing pool of them.
Inside Mortgage Finance recently noted that loans acquired through the Veterans Affairs (VA) Department are rapidly increasing, reaching a holding level of one-quarter of primary insured home loans. This tops the number of loans backed by the Federal Housing Administration (FHA) through the Department of Housing and Urban Development (HUD).
It is easy to see why VA backing is preferable from a buyer's point of view. If you qualify, you can purchase a house with no money down (up to a particular loan limit that varies by market) and no Private Mortgage Insurance (PMI) requirement. Yet, sellers shy away from buyers with VA loans, and seller's agents may serve as a screen to exclude VA-backed offers from ever reaching the seller.
Why is this so? It makes little sense, since the risk of default is borne by the lending institution and not the buyer. In addition, foreclosures on VA homes are less than the default rate of either standard or FHA mortgages.
The main reason appears to be lingering myths associated with VA loans - some with elements of truth from the past and some that simply never had a basis in fact. Let's take a closer look at some of these misconceptions.
- Slow Process - While the VA is not known for their rapid response to many issues, their record is not bad with respect to loans. Paperwork is involved, but it is comparable to the paperwork necessary to close a standard mortgage.
That leaves a potential of over 6 million veterans as buyers, not to mention those who hold non-VA loans and may retain their entitlement for the purchase of a different home.
If you are selling your home, please do not exclude VA-backed loan applicants from your pool of buyers. They have put up with enough during their service time to our country and do not need any added difficulty in finding the home of their dreams.
This article was provided by our partners at moneytips.com.
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