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VA Myths and Misperceptions

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Written By Mark Alexander, Mortgage Business Development Officer at Navy Federal Credit Union and CCAR Affiliate Committee Member

The VA mortgage program is a home loan option offered by lenders which is guaranteed by the US Department of Veterans Affairs. It provides eligible service members, including active duty personnel, veterans, reservists, and the National Guard members a housing program benefit. Because a portion of the loan is backed by the federal government, lenders can offer more favorable terms. Some of the best features of the VA loan is zero down payment required, no PMI, and more flexible underwriting guidelines.

The VA loan has been around since Congress passed the Serviceman’s Readjustment Act in 1944. However, the guidelines and terms have changed many times over the last 80 years. This has led to misunderstanding of the terms and features of the loan program. Operation Homefront conducted an online survey of 1,000 active duty servicemembers and veterans and ask them 20 questions to highlight their experiences and opinions of home buying with a VA loan. The following are the most common myths and misperceptions.

MYTH #1 – 50% of active duty respondents and 31% of veterans believe a VA loan can only be used once in a lifetime, which is not true. There is no limit on how many times they can use their VA loan benefit.

Myth #2 – 88% of active duty respondents and 69% of veterans believe a down payment is needed for a VA loan. In reality, a down payment is typically only required if they have exceeded their entitlement.

Myth #3 – Similarly, 45% of active duty respondents and 17% of veterans think that a 20% down payment is always required. This is also incorrect.

Myth #4 – 59% of active duty respondents and 41% of veterans believe VA loans have longer processing times due to extra paperwork. This is also false. Most VA loans are closed just as fast as conventional loans if the lender is proficient in VA lending.

Hopefully, most agents are already familiar with these facts. However, it is important for them to be aware of the misperceptions that possible buyers have so they can educate their clients to make the best mortgage decision when they know all their options.

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