Hot Market Home Buying: The Challenge of the VA Home Loan

Some military families hoping to use their VA home loan benefits to purchase a house are finding it tough to navigate the red-hot real estate market.

Prices have skyrocketed, and bidders are waving extra cash at sellers right and left. In some cases, hopeful buyers are even sweetening the pot by throwing in extra perks like cars and trips. The demand is far exceeding the supply.

It’s difficult for any homebuyer in today’s market, but for military members and veterans with VA loans, it’s even trickier.

Normally, government-backed VA loans are a pretty sweet deal for military homebuyers. They offer zero-down loans, low-interest rates, and mortgage insurance isn’t required. Plus, the closing costs tend to be lower and there’s no early payoff penalty.

But in the current real estate boom, those with VA loans are finding it difficult to gain an edge.

Why VA Home Loans Are A Challenge Right Now

VA loans are issued by private lenders but guaranteed by the U.S. Department of Veterans Affairs. As part of that guarantee, the government has measures to protect veterans from purchasing a home that is unsafe to live in or priced much too high. So the inspection and appraisals are typically stricter than what is done for conventional loans.

Here’s how the stricter requirements impact a military homebuyer in the current real estate market:

• Many sellers are receiving offers well over the asking price. Unfortunately, military homebuyers can be left behind in this situation because VA loans are designed to ensure a buyer is purchasing a home at a fair market value.
• Home inspections and appraisals, which are required for a VA loan, are being waived by some sellers who are anxious to close a deal.

Some sellers may also wince at the idea of accepting an offer from a buyer with a VA loan. This is due to misconceptions about VA loans such as they’re harder to close, take longer, or have lower appraisals. None of that is true, but some sellers believe VA loans are more difficult and they may not want to work with a buyer who has one.

Advice for Buyers Using a VA Home Loan

Despite the challenges in today’s market, there are buyers with VA loans finding success. Be patient. Go in knowing that it may take a little time to land the right deal.

When securing your VA loan, working with an experienced VA lender like National Home Loans can make all the difference in this market. Being pre-approved is key. Sellers are more inclined to take your bid seriously if they know you have an approved loan to back it up.

When it comes to a real estate agent, choose one that is well-versed in working with buyers who have VA loans. This will also make the process smoother. They may also be able to match you up with sellers who would prefer to sell to a military member or veteran, giving you a leg up.

We’re Here to Help

At National Home Loans, we specialize in VA loans. We’re happy to guide you through the process and can answer any questions you may have. Contact us today!