If you’re an active service member, veteran, or surviving spouse of a veteran, you could be eligible for a VA home loan with a zero-down payment. This can be a great financing option to purchase or refinance a home. However, there are some setbacks you should know about before making a decision. Get these sorted out before you get a VA loan in North Palm Beach.
Funding Fee
When you get a VA loan, you’ll need to pay a funding fee at the closing. This fee may reduce the cost to taxpayers for the VA loan program. There are a few exemptions to this, however:
- A service member who has service-related disabilities
- A service member’s surviving spouse
- A service member who was awarded a purple heart
If you do not make a down payment on your first VA loan, you may be charged a funding fee of 2.3 percent of the amount you are borrowing. For subsequent loans, the funding fee will be higher.
Primary Residences
A significant disadvantage of VA loans is that they can only be used to purchase primary residences. You can’t use a VA loan to purchase a second home, investment property, rental property, or vacation home. This can be a significant setback because it limits your ability to purchase any property that could generate income.
Appraisals and Inspections
A VA appraisal is more extensive than any other appraisal because it requires additional information that other appraisals do not need. The VA is more thorough in its appraisal process to protect the interests of veterans. Here are some of the stringent requirements:
- Proper roofing
- Use of lead-free paint
- Safe mechanical systems
- Appropriate heating systems
- Termite-, rot-, and fungi-free premises
- Zero signs of crawlspaces and basement leaks
Getting a VA loan can be quite an intensive process, as the appraisers go through the home with a fine-toothed comb. This procedure can take a long time, as the government bureaucracy can be quite slow. Because of this, appraisers often end up undervaluing homes.
Seller Resistance
Some sellers may find VA loans unattractive because they are not as common, especially in their features. This resistance may make it harder to negotiate a VA home loan deal, with the reasons being:
- The VA imposes minimum property requirements for the home to be considered safe and livable. This often leads to appraisals that undervalue the home in the eyes of the seller.
- They may appraise homes for less than they are worth, which makes sellers reluctant to work with them.
- The seller may have to pay closing costs in some markets if a veteran wants to purchase a property with zero down payment. This is not a popular option among sellers.
- The closing process can be delayed if the necessary paperwork is not completed promptly. This can be frustrating for sellers, who often want to complete the transaction and make returns on their investment as quickly as possible.
Talk to the Experts at America’s Mortgage Solutions
Should you need help fully maximizing a VA loan in North Palm Beach, contact America’s Mortgage Solutions today! We’ll make sure your purchase or refinance is smooth, seamless, and stress-free. Buy a home or refinance now through our website, or contact us at (561) 316-6800!
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