Three Disadvantages Of VA Financing


Assuming you qualify for a Veterans Administration loan, there are a few drawbacks to them. In general, these drawbacks are not significant enough to decide against VA financing nor will they make a regular commercial mortgage more attractive, but they should be kept in mind when getting a VA loan.

There is a funding fee

Most people who qualify for a VA loan are familiar with the advantage of not having to pay a down payment. Although this sounds great, people are caught off guard when they learn about the funding fee. This fee is only accessed one time, and is based upon a percentage of the selling price as well as your military category. The good news is that you can combine this fee with your financing, so you can still buy your house without any money upfront. There are also certain people who are eligible to have this funding fee waived.

There are limits to the price of the house

Depending upon the state and county you live in, there are limits to how much debt the government will guarantee. These limits are especially important for buyers who have no down payment. In addition, you need to keep in mind that these limits are based upon your income, asset to debt ratio and your credit. It is possible that the maximum financing amount you qualify for will be lower than the maximum allowed in your area. It is best to find out what the maximum price for a house will be for a VA loan for your personal finances and area before you begin to shop for your new house.

Not every seller will accept VA financing

This can be a problem when shopping for a house. Sometimes a seller will not want to bother with an offer with VA financing because of ignorance. Sellers think they are dealing with the government, when in fact, they are dealing with a private mortgage company that has guarantees from the federal government. However, it is true that the appraisal must be done by an agent approved by the government, and the appraisal may be lower than what the seller desires. Once this happens, a seller may turn down all offers with VA financing. Your best course of action is to make sure a real estate agent only shows you houses that will accept offers with VA financing. Also, keep in mind that the tighter the supply of houses is in your area, the more likely a seller will not bother with an offer tied to VA financing.

As long as you keep the above disadvantages in mind, a VA loan is generally a good idea. If you qualify for this type of loan, it is because you or your loved one has earned it, and you should take advantage of this benefit. Get a free VA loan quote today.


20 October 2015

the pros and cons of different types of loans

I really wanted to buy a golf cart to use to get back and forth from the bus stop and my sister's house. What I didn't realize when I first started looking at golf cars is how expensive they can be. That was when I began looking into financing options. I had to decide whether to use the financing services through the golf cart sales place, or to go around them and find a loan on my own. I took my time to learn the pros and cons of each type of loan that I was considering. Scroll through my site to find the pros and cons of different types of loans.