VA home loans?

[Brad Johnson]

Brad, I'm not trying to make it personal, honestly.

Okay, then I'll digress to the objective and address the previous assertions one by one.

Assertion Number One
The VA loan avenue represents a serious ass-pain to a realtor not willing to jump through the extra hoops, wait the extra time, or look for homes that meet the more stringent VA inspection requirements.

First, the person you talked to apparently hasn't been in the game for a while. Getting a house that passes the VA criteria (which is from the appraisal, not the inspection, by the way) isn't hard. In fact the VA criteria are roughly the same condition requirements needed for an FHA-insured mortgage. They are quite simple. Summarized, the house must be structurally sound, habitable, and contain no conditions that would be conducive to further deterioration.

The first two are pretty self-explanatory. The third is a little more esoteric until you understand the reasoning. What they are looking for is any condition that, left unresolve, will cause further deterioration. The vast majority of problems deal with one of three conditions - active water intrusion (normally roof or plumbing leaks), excessive stuctural shifting related to foundational issues, and peeling exterior paint. All these conditions must be corrected on FHA-insured mortgages as well as some conventional products.

Result? Finding a house that meets the VA criteria is no more difficult than finding a house that meets FHA criteria (which currently represents the majority of home purchases).

Conclusion - Assertion number one is blantantly incorrect.


Assertion Number Two
If he's trying to move houses at a good clip, the VA loan isn't really worth his time compared to FHA, etc. There's additional pain for the seller who must pay certain costs, too.

Real estate agent's don't move houses. Houses move as a result of market forces far beyond the control of the agent. How well a house moves depends on the relationship between condition, location, and price.

As for "not being worth the time", well... the financing is but a miniscule part of the overall transaction. It's also no sweat off my brow. The lender handles the financing, not me. All the extra work is on the buyer in terms of documentation. In terms of my involvement, I could care less what kind of financing they use.

My concern is getting them the condition, location, and price they want, and having that transaction come to a successful close. If the choice of financing represents inherent roadblocks then I am both legally and ethically required to recommend the review of other options. VA financing throws up the most roadblocks. Thus it gets the lion's share of dirty looks.

Conclusion - Assertion number two is incorrect, the result of a long-standing misconception that the agent is somehow a part of the financing process. Reality is we want to stay as far away from it as possible.


Assertion Number Three
That's not necessarily a bad thing for the disabled vet buyer, though. If he's at least 10% disabled or more, and willing to work through the system, he can bypass the lazy realtor to find a home, but he's got to be aware of the extra conditions.  

Assertion number three tries to combine the buying process and the lending process into a single issue. They are mutually exclusive.

First, it tries to promote the agent as being somehow involved in the extra work the BUYER must do to get the loan. The extent of the agent's involvement is waiting for that magic sheet of paper that says Pre-Approval on it. All the other work is between the buyer and their lender.

Second, it tries to infer a property condition protection for the buyer exclusive to VA loans. The same basic protection is also part of the FHA-insured loans which represent the majority of the mortgage loans currently being made.

Third, it tries to make the agent out as the bad guy by direct statement ("lazy"). The agent doesn't care what kind of financing is involved so long as the buyer is willing to be realistic about the inherent restrictions involved. The amount of time and effort required for the agents to find a house is the same regardless of loan. Unfortunately, buyers want to see this as the problem instead of admitting that the loan itself becomes a stumbling block in the negotiations.

Conclusion - Assertion number three is hysterically, ignorantly, and stereotypically incorrect, based mostly on a hugely misplaced locus of responsibilty that tries to combine the search for a home with the search for a mortgage. And the fact of a socially ingrained condition that views real estate agents as only slightly better than your average child molester.


Gev, what I'm getting at is a lot of people adhere to a VA mortgage for the simple reason that they are a vet. They've somehow come to the concrete conclusion that being a vet automatically means the VA setup is the absolute-est, ultimate-est, best-est thing for them just, well... just because. As a result they will come up with some of the most outlandish and inherently foolish reasons to stick with it, and do so in the face of products that are overwhelmingly advantageous to their getting into a home that meets their needs and budget.

There is a common thought process among vets, especially older or disabled vets, that the ONLY mortgage product they should consider is a VA because it came with a big dollop of extra-specialness and a host of protections not afforded conventional mortgages. Thirty years ago that rang true. Today it's patently false. Unfortunatley it still gets plenty of lip service, along with a healthy serving of head-shakingly poor justifications for sticking doggedly with it.

Notice that in all of this I never, not once, said that Balog should not use his VA benefits. I simply said that his particular set of financial circumstaces results in mortgage choices that will likely be better suited to his current situation. He should, in fact, hook up with a good lender and explore ALL his options (which I've also said, more than once, in this thread).

I also have a personal conclusion - the "agent" who told you the above info either hasn't been in the game for a long, long time or they are woefully ignorant on what VA Guaranteed financing actually entails from the agent's perspective. They are probably real nice folks but their response to your inquiry was a bit... lacking.

Brad

[Thor]

My ex-wife is a Realtor, now a Broker/Realtor. I put her through Realtor school and learned through her and my own experiences. She also did Real Estate closings in Virginia for a couple of years before that. The VA was the right way for me to go on our first house in 95. We had little money for the down payment. The PITA things for the VA was: waiting on the inspector; ensuring the house would pass a VA inspection (while this was a newer house, I felt comfortable with it, but one never knows. Can a house fail a VA inspection?? Yes, especially most of the older homes. One example is a requirement for a bathroom exhaust fan or window. If a bathroom in the house has neither, it could easily fail.) Then there's the fact that the seller has to pay certain things. If the seller doesn't want to comply, there are two things the buyer can do; 1.) roll those "fees" into the offer and HOPE to hell that the house appraises for the full amount or 2.) find another house. Do VA loans make a slam dunk for Realtors?? No. Are there better programs out there for the buyer?? More than likely. Only Balog can make this decision. It's worth investigating ALL avenues for a mortgage. I support Brad's comments.

[Gewehr98]

And the fact of a socially ingrained condition that views real estate agents as only slightly better than your average child molester.

Not to thread veer, but that raises a good point.

The housing bubble/collapse, and subsequent economic slump, doesn't exactly endear folks to realtors these days.  Even though the subprime mortgage lenders are (IMHO) the hitch pin, it appears that realtors are really laying low in the meantime.  They are scapegoats, perhaps on the scale of Fistful.

My wife and I work part-time for several local realtors, and the publisher of a tri-county real estate book (Y'all thought our multiple-CPU computers were just for Brothers In Arms, didn't ya?).  They aren't exactly happy people, and the dribble of monthly ad copy coming in to our home office shows it.  I would think if you're a realtor wanting to regain at least a fraction of your former status and not looking for another career, you'd best be putting in some serious overtime.  As it heads to press, a 12-page tri-county Real Estate Book pales in comparison to the previous 80 pages of a year ago.      

[Brad Johnson]

Fortunately our market never took a hit. That, plus agents being a big part of the community financially, socially, and civically, means we don't get the scowls seen in other areas. The net effect is to be on the same rung of the ladder as attorneys.

Brad