Hamilton Herald Masthead


Front Page - Friday, March 26, 2021

Demystifying VA loan myths

I wrote a few weeks ago about how homebuyer “love letters” are becoming more common in this low-inventory market. I discouraged using them because they often include the buyer’s demographic information, which the seller could use – knowingly or through unconscious bias – when deciding whether or not to accept or reject an offer. This could lead to an alleged violation of the Fair Housing Act.

I’ve recently observed another form of discrimination that isn’t against one of the protected classes but is equally troublesome: Sellers are shying away from buyers who wish to utilize a benefit earned for service in the armed forces – the VA loan.

I’ve had the honor and privilege of serving veterans throughout my real estate career, and I’m saddened to see veterans potentially left out of the home buying process when purchasing via a VA loan.

VA loans are issued by private lenders and partially backed by the Department of Veterans Affairs. A VA loan is a no-down payment mortgage option for eligible recipients who can use it to purchase their primary residence or refinance an existing mortgage.

Since 1944, when VA loans came into existence, the VA has provided more than 22 million loans. Yet there are many misconceptions about VA loans, one of which is they take longer to close.

However, the average time it took to close on a VA loan in 2020 was 51 days, Ellie Mae reports, which is two days longer than an FHA loan and three days longer than a conventional loan.

Yes, with a VA loan, an appraiser can sometimes be tougher on a house, but this is because a VA loan requires the property to be “safe and sanitary.” This doesn’t mean there can’t be any repairs to be made, just that the property overall should be in good shape.

Some argue VA appraisals take longer, but in reality, the process is the same. Once the seller and the buyer bind a purchase and sale agreement, the lender orders the appraisal, which is assigned to the next available VA-approved appraiser.

When working with clients to sell a property, a Realtor can specify in the Multiple Listing Service (MLS) which type of loans the seller will accept and explain the differences between them.

With a Realtor’s guidance, the seller can also decide if a particular loan type would work best for individuals looking to purchase their property. VA loans come with a few minor costs for the seller, which turn out to be minimal.

Selling and buying a home requires both sides of the transaction to take risks. One could argue there are pros and cons with nearly every transaction, including all-cash purchases, which can meet snags between contract and closing.

But with all parties working together and acting in good faith, Realtors can assist in keeping the transaction moving to closing, regardless of loan type.

While a seller has a right not to entertain a specific loan type, I urge my fellow Realtors and the general public to honor the sacrifices made by the very people who have the opportunity to use these loans.

It should be obvious, but we all owe the deepest gratitude to those who have given so much. Also, Realtors should do everything they can to protect all homeowners, regardless of their financing.

Our Realtor Code of Ethics demands all Realtors to “protect and promote the interests of their client” and to treat all parties honestly. But are we doing that if we perpetuate myths about certain loan products, such as VA loans?

Helping everyone achieve homeownership is our job. What’s more, Realtors should do their utmost to serve those who have served us all. That’s Who We R.

Greater Chattanooga Realtors is The Voice of Real Estate in Greater Chattanooga. A regional organization with more than 2,400 members, Greater Chattanooga Realtors is one of 300 local boards and associations of Realtors nationwide that comprise the National Association of Realtors. Greater Chattanooga Realtors services Hamilton and Sequatchie counties in southeast Tennessee and Catoosa, Dade and Walker counties in northwest Georgia. For more information, visit www.gcar.net or call 423.698.8001.