VA Home Loans - explain please (sales, real estate, mortgage)

[Tinkerbell271433]

Our home has been on the market for less than 24 hours. We've received two offers. One of them is $25K above listing price. They have $130K to put down. My concern is it is a VA loan. Why would someone who can clearly do conventional financing pick a VA loan?

I do not know much about them except I think my agent mentioned the negative is if the home appraises for less with a VA loan that appraisal stays tied to your property for 6 months. I do not believe my home will appraise for the extra $25K as a home in my neighborhood has never gone this high.

Also, with a VA loan is the inspection process more rigid and will the VA fail to provide the mortgage with any major issues ( i do not suspect any however).

Any advise appreciated.

PS- these two offers just came in and our agent is sick with the flu. Of course we will seek counsel from him tomorrow but looking for immediate input.

[hertfordshire]

You would probably do better in the real estate forum: https://www.city-data.com/forum/real-estate/

[HokieFan]

Here is some information about the process. Mostly geared toward the buyer but will answer some of your questions regarding appraisal and inspection.

https://www.veteransunited.com/va-loans/process/

[RecessionCasualty]

Like the others said, you'll have better luck with the real estate forum. With that said we sold our last house to a someone with a VA Loan. The inspection didn't seem any more rigid than the others we had done (and there were other inspections by other buyers). They did ask about one change to the house and asked if there ever was a permit. It was like that when we bought it and doubted the previous homeowners got a permit. We simply told them that and there were no problems. Everyone closed on time.

[BOS2IAD]

We used a VA loan to buy our first house. There are 2 good reasons to use a VA loan --- 1) We got a loan with no money down so when it came to closing, we only had to pay whatever costs that average buyers have to pay; and 2) With a VA loan one is able to qualify for a bigger mortgage. Since your potential buyer is putting down that much money, s/he is most likely using a VA loan in order to afford more house than a conventional mortgage would allow. As a caveat, we bought that house in the late 80s. Some things may have changed since then...

All that said, I, too, recommend posting your question in the "real estate forum". Many realtors post there so you will get some good responses.

[Jon_In_NOVA]

Also my two cents... I used a VA loan for my current primary residence, first I had cash to put more than 20% down however I wanted to keep that in the market for growth and some of that cash liquid. Secondly the VA loan allowed me to put no money down (outside of the VA funding fee) and avoided paying points or PMI as I also have stellar credit.

There are a few more checks in regards to the home inspection before the VA secures the loan and can close properly so as long as your house is not hiding anything that would show up on a home inspection as a concern there 'should' be no issues as any other buyer with a conventional loan.

P.S. I'm not a R.E. agent, just as washed up warfighter now turned corporate...

[SmartMoney]

You need to understand some basic nuances at play. The VA loan is the only loan that protects the borrower, the veteran. A little background - soldiers were returning home after WWII and the Korean war, buying homes with their brides. "Flim-flam "builders put up large subdivisions with major difficiencies. Stories of homes that crumbled to the ground from shoddy construction alarmed our Congressional leaders. So, the Veteran's Administration was born and evolved into the Department of Veteran's Affairs.

Conventional loans and FHA loans, the appraisal protects the lender. While the lender is somewhat protected, it is the veteran that is the focus in a VA home loan. But what is not widely known (or used) is veterans have the power to get certain things waived. (Example, they can write a letter stating they are aware the home was not built to VA specifications and they wish to proceed). So are there minimum appraisal standards? Yes, but that is true of all loans. No one is going to let safety or code violations get a pass. But the VA appraisers will also take on cosmetic issues likely to be a structural issue down the road, such as scraping and painting peeling paint. Screen tear in a screened in porch? It will require repairs so a toddler doesn't find him or herself going through the fabric.

The OP doesn't mention the sales price, but the VA loan can be priced significantly lower when it comes to interest rate. With 130K down, the VA buyer can easily pay cash above a low value. (The veteran just needs to acknowledge he is aware the home appraised for less than the sales price and the still want to proceed). Just make certain your buyer is with a lender experienced in VA loans.