Want to know the truth about the VA Loan? We all know that the VA loan is an amazing asset and there are many WONDERFUL attributes to this loan. Unfortunately like any asset there are always negatives and the VA Loan is no exception!
There is a reason why the saying “too good to be true” exists! That being said, we still have used the VA loan TWICE! So obviously it can’t be that bad, but here are the things I have learned over the years. I hope this helps you learn about the drawbacks of the VA Loan as well as the good things about it too!
Drawbacks of the VA Loan:
1. The VA has Non Allowable’s– as part of the requirements there are about 1% of closing costs that the VA loan won’t cover. While this isn’t a “big” deal-during a sellers market where closing costs aren’t paid it can be hard to get the seller to cover these costs!
2. Super Strict Home Condition– The VA and FHA loan have some of the “strictest” funding requirements. While it is “possible” to get a fixer upper approved (we did it!) it is difficult. They often require “lender repairs” so this might not be the best type of loan if you have a “fixer upper.”
3. Funding Fee- The VA loan charges a funding fee depending on the number of times you have used the VA loan. While this rolls into your loan, it can often times be costly. So make sure you have evaluated this cost and its value to you!
4. Orders– Since this is required to be an owner occupancy, you have to have written orders to the area. If you do not have orders you cannot close on the home!
5. Negative to the Seller- There are many sellers who do not like all the paperwork involved
6. Personal Property- The VA Loan cannot be used for an investment or secondary home. You or your dependents are required to move into the home within 6 months! You have to stay there for one year unless orders or other unforeseen circumstances occur!
So what has been your experience with VA loans? Have you seen any drawbacks of the VA Loan yet?23