Busting the final two myths you shouldn’t believe about VA loans.
Today we’re continuing our conversation on myths about the VA loan with our final two misconceptions.
Myth No. 9: The VA pays for everything. This is simply not true. In some cases, you can get some of your fees waived depending on your level of disability, but not everyone qualifies for that. Generally speaking, the VA does not pay for modifications to the home as part of the loan process, nor do they pay for repairs. If you are in a home that needs some work, you can get assistance or even a grant to pay for certain items, but you qualify for that through a VA grant program as opposed to the VA loan itself.
“Generally speaking, the VA does not pay for modifications to the home as part of the loan process.”
Myth No. 10: The VA loan is the best loan for you. One problematic aspect of the VA loan is that you can sometimes get into a negative equity position depending on the market in your area. When you buy a home, they add a funding fee to the loan. If the house is $200,000 and your VA funding fee is almost 3%, you now owe $203,000, meaning that you start in a negative equity position from the day that you close. Bear in mind that the funding fee doesn’t go away for years depending on your interest rate and how much of the payment goes toward principal versus interest. Typically, most loans are front-loaded with the interest, and less goes towards interest until you’ve hit the three- or four-year mark. With FHA and conventional loans, you’re bringing anywhere from a 3.5% to 5% down payment to the table rather than just closing costs.
Your real estate agent should be able to provide you with more information about the VA loan. If you’re not getting the help you need or if you have any questions, don’t hesitate to give us a call or send an email. We’re glad to help you.
