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My house had a 20 year old roof and was close to 50 years old. The lender did require to me to replace the roof after I moved in which I had planned on doing anyway. Since I bought the house from my aunt's estate we only had an appraisal done, not an inspection other than for termites.
But the OP is trying to choose. All things being equal, a loan with a buyer who has a lot of cash to put down shows more promise of closing if a house does not appraise. So that puts the conventional loan right over the top.
Maybe the seller is asking too much if the house doesn't appraise? I lost a condo I wanted to buy a few years ago because the seller insisted on a certain price and the place didn't appraise for that amount and I didn't have the money to make up the difference. After it sat on the market for another 6 months, the owner eventually sold the place for what it was appraised.
I am sorry to break it to you-- a lot of sellers see a low or no down payment loan as unappealing with a buyer. I wouldn't accept such an offer myself.
Having a low or no down payment doesn't mean the buyer is a credit risk or some deadbeat. Once you get your money from the sale of your house it really doesn't matter to you anymore does it? It's also possible they have cash but want to use their VA benefits and save the cash they have in the bank to do any needed updates to the house and/or yard. I would think after serving this country the least the government could do is give them some benefits, which includes a VA loan.
Some of you people treat people who want to use their VA benefits as pariahs. Such snobs.
Last edited by chiluvr1228; 07-15-2018 at 07:45 AM..
On the other hand, a buyer who is REQUIRED to put down 20% is NOT able to use that money to plan for repairs or upgrades that are discovered during the contract. A VA buyer can hang on to their cash to pay for new floors, or a new bathroom or kitchen in their new home. If something goes wrong for a conventional buyer and their cash runs short... no loan.
Taking the risk that I'm sounding like a broken record, don't assume their down payment is the only money they have. And don't assume someone who isn't making a down payment doesn't have any money. There can be all kinds of reasons for these decisions.
What seller should care about is the strength of the loan approval. And you can get a feel for that from talking with the buyer's broker and lender.
How they're managing their cash really shouldn't matter to you.
Yes, it used to be this way but they have gotten much easier to deal with. I know because I bought my house with a VA loan last August. My appraisal went fine, I was actually surprised it appraised as high as it did. Plus the loan is guaranteed by the VA where a conventional loan isn't. I know a lot of people are leery about a VA loan but time wise it worked out about the same from start to finish. You are NOT required to have PMI with a VA loan and even though I had to put $0 down, doesn't make me less motivated to make my payments on time and continue to make upgrades in order to increase the value of the house.
The approval rate is NOT 100% any more than any other mortgage loan. You have to have a credit score of at least 680 (if I remember correctly). A person with bad credit isn't going to get approved for a mortgage even with the VA. If I hadn't gotten the VA loan I would still be renting and paying more for a 2 bedroom condo each month than I am paying for my mortgage.
Most sellers realize that their interest in the buyer's business is over as soon as the loan closes. The money the seller gets is exactly the same, whether it comes 100% from a bank, from between their mattresses, from their horse race winnings, or from a gift from Aunt Edna.
Of course, this is still a people business, and sometimes you end up with someone on one side or the other who will stick to an opinion that is either wrong or just doesn't matter no matter how much it gets in their own way. My dad was one of these people, may he rest in peace. Of course, he was absolutely right on about 90% of things... So that just made it harder to argue with him on that last 10% he was wrong about. Sometimes we just had to declare a truce and move on.
Obviously we have to agree to disagree. And I don't think you can appreciate the wider implications of using a zero down loan so I will explain.
When people overspend on a house with no down payment, not only more often than not do they foolishly pay mortgage insurance (biggest scam ever) but they put the bank entirely at risk if they can't make the mortgage. Miss a few payments and the bank 100% owns the house and has to recoup their investment, typically at a loss. Enough people do that and you have a crisis which devalues other homes and investments.
Its big picture--not just you feeling like you are some kind of big deal for being able to buy a house without putting anything down.
I see a buyer who is willing to do this and I see a foolish person who I don't want to deal with. Simple as that. I say no thank you. There is ALWAYS another offer as I have been smart about the markets in which I have invested. Have I said no to a zero down loan and had to wait a few days or even weeks for something better to come along? Yes of course but the wait has been short and something better always did.
I am not a flipper these days but thanks for disparaging the hard work we put in. It was a way to generate cash for bigger and better investments. Just pointing out that I had an eye on the market from my early adulthood and have been watching trends and human behavior. The zero down offer is a poor one in my experience. But it won't stop people from trying to make them. I know plenty of sellers who feel the way I do, but sadly not enough people pay attention to this. I absolutely judge people who are willing to go this route.
But this thread is not about a zero down offer. Its about a 5% down and a 20% offer. And the OP has not been back to comment.
Va loans do not have to pay PMI and the interest rates are lower. Again putting no money down has nothing to with people buying homes they can’t afford. The crisis in 2008 was caused by adjustable rate and interest only loans. Many sellers just want to sell their homes as fast as possible and get the most money back. They could care less what a buyer puts down or what kind of loan they’re getting.
Va loans do not have to pay PMI and the interest rates are lower. Again putting no money down has nothing to with people buying homes they can’t afford. The crisis in 2008 was caused by adjustable rate and interest only loans.
...And most important, no document loans where people didn't even have to prove their income.
We're nowhere CLOSE to that kind of situation now. The approval process, no matter what kind of loan, is plenty arduous.
The type of loan is no indication of how much money they have. People select loans for a variety of reasons, none of which a seller will know unless they ask.
As for the OP's situation; The VA loan will most likely require the property to be a bit better condition, so if you have some addition without a permit, or some other significant item, they will not approve a loan until these things are corrected.
You can ask for a large holding deposit, like $10 thousand or so (I do not know your price of the home, just an example), and that way who ever comes up with it, that is who you select. If they both do...
In order they put in the offer could be a guide.
As for appraisals; I have heard about the VA being conservative, but they use appraisal services, so it is not like some guy working for the VA is coming out, they are using the same service as anyone else is using, at least in my experience. I think some, but not all complaints are from people who really over value their home, and want to blame the VA when it comes below their expectation (and not blame the appraisal company).
As for me, I set out how much I want for a deposit, then I accept who puts the offer in first, only exception being cash buyers who automatically get selected. But my properties are in great condition, no modifications or deviations, that would get a flag from an appraiser.
The type of loan is no indication of how much money they have. People select loans for a variety of reasons, none of which a seller will know unless they ask.
For what its worth, I don't think anyone here has claimed that. The point of contention is over how much you're putting down with a VA loan (where nothing is required to be put down . . . such favorable terms are generally not available for conventional loans) and what that could show about your financial health as a buyer.
Quote:
Originally Posted by boxus
As for the OP's situation; The VA loan will most likely require the property to be a bit better condition, so if you have some addition without a permit, or some other significant item, they will not approve a loan until these things are corrected.
You can ask for a large holding deposit, like $10 thousand or so (I do not know your price of the home, just an example), and that way who ever comes up with it, that is who you select. If they both do...
In order they put in the offer could be a guide.
I know that the VA loans have minimum property requirements centered around safety, structural integrity, and sanitation. I don't know enough about the process to determine whether/how these requirements differ from a traditional loan, which I'd imagine have some minimum property requirements, too. This gets into the VA minimum property requirements a little bit: https://www.veteransunited.com/valoa...-requirements/
Quote:
Originally Posted by boxus
As for appraisals; I have heard about the VA being conservative, but they use appraisal services, so it is not like some guy working for the VA is coming out, they are using the same service as anyone else is using, at least in my experience. I think some, but not all complaints are from people who really over value their home, and want to blame the VA when it comes below their expectation (and not blame the appraisal company).
Correct. When I bought my condo using a VA loan, there was no special appraiser used. The appraiser who looked at my place applied the same standards (or so he says) in appraising my unit as he did for units using more conventional financing.
And I think some of those complaints could be from that. But, tied to that, I'd think that some of it is due to people using VA loans putting zero down who aren't able to make up the difference if the property doesn't appraise.
Quote:
Originally Posted by boxus
As for me, I set out how much I want for a deposit, then I accept who puts the offer in first, only exception being cash buyers who automatically get selected. But my properties are in great condition, no modifications or deviations, that would get a flag from an appraiser.
That's a great way of going about things, IMO.
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Sometimes we just had to declare a truce and move on.
