The 7 Most Common Myths About Wisconsin VA Mortgage Loans
Posted by Madison Mortgage on February 3rd, 2010
In today’s blog post we are going to look at the common myths surrounding VA loans in Wisconsin. Whether it was the broker giving the wrong information or finding outdated information from non-reliable websites – it was evident that for whatever reason, the facts about VA Loans were getting distorted.
For years I have been doing VA loans and I thought it would be a good idea to take a look at the most common myths I’ve heard about Wisconsin VA Loans:
1. “Can I use my VA eligibility more than once”
This is by far the most common myth we hear – but this is definitely false. There is no limit on the number of times you can use a VA Loan. Now if you’ve had a VA loan previously, you need to have had your entitlement restored by paying off the mortgage (pay off balance, sell the property, refinancing into a conventional mortgage) in order to get another VA Loan. There is a possibility in which you could have more than one VA Loan outstanding at a time – but only if you didn’t use your entire entitlement on the purchase of the first property. Now if you’ve already used a VA Loan previously, you just have to keep in mind that the cost of the VA funding fee is increased from 2.15% to 3.3% (no down payment) for every subsequent use of a VA Loan. If you’ve accumulated equity on the sale of your first home, and you can put a 5% down payment the next time, your funding fee can be reduced from 3.3% to 1.5%.
2. “Sellers won’t accept my offer if they know I’m doing a VA Loan”
This was the case a few years back when it was a “sellers’ market” and it was common for sellers to get multiple offers on a property that were over the asking price. Sellers would often be reluctant to accept VA offers because they had to pay additional costs to cover the VA non-allowables. Now that the market has shifted to a “buyers’ market” – we’ve been seeing sellers more than happy to accept VA offers. In fact, since the guidelines for conventional loans are constantly changing and getting tighter, sellers are more confident that the loan will be approved if the buyer is using a VA loan because the guidelines for VA Loans very rarely change.
3. “The VA inspector will check the property so I don’t have to worry”
There is no such thing as a VA inspector! In fact, when you sign your Wisconsin VA loan application package, you are required by VA to acknowledge three times in writing that you know this fact and you understand how important VA thinks an inspection is. VA strongly suggests that you hire an inspector.
4. “VA Loan amounts are not high enough to buy a property in Wisconsin”
When I hear from military personnel who are new to Wisconsin, many of them think that the VA Loan amount is less than the conventional loans limits. This is not true and in fact, VA loan limits in Wisconsin are the same as conforming loans which are currently set at $417,000 – there is no shortage of properties in Wisconsin that a VA Loan can cover. Also, see our Jumbo VA Loans page for information on Wisconsin VA loans over $417,000
5. “Those in the National Guard or Army Reserves are not eligible for a VA Loan”
Not true. Those who have only served in the National Guard or Army Reserves may also qualify for a VA Loan – they just have to have at least 6 years of service compared to 2 years or less in the regular military (Army, Marines, Navy, Air Force, Coast Guard).
6. “I cannot qualify for a VA Loan since I’ve declared bankruptcy in the past”
Again – not true. If you filed bankruptcy but have been discharged for at least 2 years – we can disregard the bankruptcy. If it was discharged within the last 2 years, there is a possibility to still get a VA Loan if:
the applicant or spouse has obtained consumer items on credit subsequent to the bankruptcy and has satisfactorily made the payments over a continued period, and
the bankruptcy was caused by circumstances beyond the control of the applicant or spouse such as unemployment, prolonged strikes, medical bills not covered by insurance, and so on, and the circumstances are verified.
Now if you filed for Chapter 13 – you may be eligible for a VA Loan if:
you have finished making all payments satisfactorily.
you have satisfactorily made at least 12 months’ worth of the payments and the Trustee or the Bankruptcy Judge approves of the new credit.
7. “I’m a VA borrower, I don’t have closing costs”
Completely untrue. Wisconsin VA borrowers have closing costs just like everyone else. They are allowed to have others pay for their closing costs. But, the closing costs exist and must be paid by someone.
These are just 7 of the most common myths I hear about VA Loans. If you have a question about VA loans – please feel free to contact me.
To view additional FHA loans requirements visit our VA page or VA Streamline Refinance page on our website.
Also view our other Government Loans including FHA Loan and Rural Housing.
Your local Wisconsin VA Mortgage Banker:
Toll Free: (877) 240-5810
brian.collins@www.madisonmortageguys.com
http://www.MadisonMortgageguys.com
Visit my blog at http://www.madisonmortgageguys.com/blogs-mortgage-guru/
