New Construction, VA Loan, Price Negotiation (3%, fee, PMI, property)

[mistiliah]

My husband and I are looking into new home contruction. We are both military veterans and are wondering how using a VA loan will go with this this. Also, we want to know about price negotiation in the Orlando area. We are pre-approved for a home loan through the VA (which is backed by the government, so it's guaranteed to the seller). How will this affect price negotiation? We don't want any upgrades, but we are hoping to take almost $30K off the price.

[renriq02]

VA loan guarantee doesnt mean that the borrower is guaranteed the loan.
You will need to qualify for the loan AND the subject property will need to qualify. It is one of the hardest loans to qualify for but can be the most beneficial.
If this is your 2nd time using a VA loan then I would HIGHLY recommend that you look into FHA or LPMI. 2nd time users pay a 3.3% funding fee PLUS regular closing costs. The funding fee is waived if the VA borrower is disabled.

With FHA you put 3% down, have a 1.5% funding fee, and pay a 0.5% monthly MIP payment.
With LPMI you maybe subject to put up to 10% down, but will not have a monthly MIP/PMI payment or a funding fee.
VA maybe 2.15% for first time or 3.3% 2nd time. There are no monthly MIP/PMI payments.

Originally Posted by mistiliah

My husband and I are looking into new home contruction. We are both military veterans and are wondering how using a VA loan will go with this this. Also, we want to know about price negotiation in the Orlando area. We are pre-approved for a home loan through the VA (which is backed by the government, so it's guaranteed to the seller). How will this affect price negotiation? We don't want any upgrades, but we are hoping to take almost $30K off the price.

[shenane]

Yep. Not guarrenteed to the seller at all. And the last time I read about VA loans, I read that only 25% is guarrenteed to the lender. So the lender still has a lot to loose if you default.

I remember applying for my first VA loan back in the mid nineties. The process was so complicated, it made my stomach hurt. I was thinking to myself, if the loan is guarrenteed, why is the bank being so strict?

I finally got approved, but since then I have always gone conventional. Mainly because that funding fee doesn't go anywhere. It doesn't pay down your principle or anything. When possible, IMHO it's best to try to save a little for a downpayment (at least that goes to the principle) and go conventional.

Sorry, I have never purchased a new house so I don't know if there is anything special. A house is a house, I think you can still go VA and you could still negotiate?? Not an expert

Originally Posted by renriq02

VA loan guarantee doesnt mean that the borrower is guaranteed the loan.
You will need to qualify for the loan AND the subject property will need to qualify. It is one of the hardest loans to qualify for but can be the most beneficial.
If this is your 2nd time using a VA loan then I would HIGHLY recommend that you look into FHA or LPMI. 2nd time users pay a 3.3% funding fee PLUS regular closing costs. The funding fee is waived if the VA borrower is disabled.

With FHA you put 3% down, have a 1.5% funding fee, and pay a 0.5% monthly MIP payment.
With LPMI you maybe subject to put up to 10% down, but will not have a monthly MIP/PMI payment or a funding fee.
VA maybe 2.15% for first time or 3.3% 2nd time. There are no monthly MIP/PMI payments.