VA Loans – What Most Realtors Don’t Know
VA Loans – What Most Realtors Don’t Know are the tricks we get to use with VA loans. The loan environment is constantly changing. Because of that, sometimes Lenders don’t know the newest Real Estate stuff, and RE Agents aren’t up to date with loan stuff. So it’s not surprising that I sometimes hear agents being worried that VA loans are somehow a disadvantage in the buying process.
I have 5 reason that a VA loan is superior to nearly every other loan out there. But I’ll just highlight one of my favorites here.
LTV Flexibility
What the heck does that mean? Well, when an appraisal is made on a property, the lower of the appraised value and the sales price becomes the 100% value mark for the lender.
- For example, if the purchase price is 400k, but the appraisal only comes in at 375k – what happens?
- 4 things can happen
- 1- The seller sells it for 375k
- 2- The buyer buys it for 400k
- 3- They split the difference – $387,500
- 4- Everyone walks away
For #s 2 & 3 – there is a loan implication. With a regular loan, if you planned n coming in with 10% down, then your loan amount was originally $360k. But now your max lona amount with 10% down (based on $375k) is $337,500. The buyer needs to bring in the rest upto the purchase price. So for option #2 – that’s now $62.5k, or option #3 – $50k (instead of the originally planned 40k).
Sounds like a real pain, right?! Well with a VA loan it’s just not as bad. Because the VA borrower is not obligated to a specific down payment, they only have to come up with anything they want to pay that exceeds the the appraised value.
For more info about the other benefits of VA, or how I can help you come up with a bulletproof mortgage plan, click here and shoot me an email.