Friday, January 11, 2019 / by Jenny Carroll
Today's VA Loan" Better and More Competitive Than Ever
Posted by Jenny Carroll
For many years, the VA loan of the past had a reputation for being less desirable in the real estate marketplace, especially in consistently hot markets like we have here in Central Texas. I spoke with Chad Bowman of Veterans United Home Loans in Austin & Killeen to find out how this product has changed and how it has become a strong selling point for your Veteran property buyers.
Chad, a Veteran himself, spent the last several years teaching Veterans, REALTORS®, and the general public about how to successfully navigate the easier-than-ever VA loan. Below is our conversation:
1. How has the VA loan experience changed over the last decade for the borrower? The Seller?
Since I started as a VA Loan Specialist 14 years ago, the VA loan has only gotten better and easier for everyone involved. In fact, in 2018, VA loan usage hit an all-time high, proving that point. The reason I say that VA loans have improved is because many of the barriers or concerns have been removed over the years. Did you know Realtors used to drive to Waco to get a veteran’s Certificate of Eligibility? No kidding. Nowadays we can typically pull them up online in less than a minute. In the past sellers were concerned about costs they would have to pay for the buyer. Now there are multiple ways to get a VA loan done without the seller paying anything. And for the seller, there are a lot fewer hoops to jump through. Sure, we sometimes have to deal with termite report issues or VA-required repairs in the appraisal, but that is the exception, not the norm. Overall, if the VA buyer is working with a knowledgeable Realtor and an experienced VA lender, it should be a smooth process for all involved.
2. How are VA loans subsidized?
The VA program is actually funded by the veterans who use the program through a VA funding fee. Many veterans don’t pay the funding fee since disabled veterans don’t have to pay the fee, but most other veterans do. The good news is that the VA funding fee is much less than paying mortgage insurance on FHA or other programs.
3. What are the most common obstacles for receiving a VA loan?
The biggest obstacles for receiving a VA loan are the myths and misconceptions about VA loans that discourage veterans from even applying. That’s why it is so important for Realtors to have VA training and be in a position to educate their buyers. Once a veteran does apply, the next obstacle can sometimes be credit scores. Most lenders look for a minimum of a 620 fico score, but if a veteran has lower scores, we usually enroll them in our free in-house credit repair program to get their scores up. With the flexibility of the VA program, in many ways, it has fewer obstacles than other traditional loan programs.
4. How does a VA loan differ from a traditional loan and is it as competitive as a traditional loan in the home buying market?
Wow, that’s a great question. I would love for you to take my VA class “Home Loans for Veterans”! You will learn that VA loans beat all other loan programs almost every time. The reason VA is so much better than other programs is because there is typically no down payment required. There is also no mortgage insurance, even without a down payment. And VA interest rates usually beat Conventional loan programs. So VA is definitely competitive with other programs from the perspective of the veteran buyer. Where you see it be less competitive, is when sellers or Listing Agents consider VA offers. That’s where education is so important. If all parties fully understand how the VA program works, they are much more likely to take a VA offer seriously. I take calls from Listing Agents every day addressing questions about VA loans to help them see them the way that I do and not as an obstacle.
5. Do you have a good anecdote of a successful loan you can share?
Yes, I have hundreds of those, but here’s just one… A veteran’s son brought him to one of our free VA loan seminars in Georgetown to learn about his VA home loan benefits. He had been told by multiple lenders that he could not get a VA loan unless he paid off $20,000 in debts first and he did not have the money to do that, so he had given up on buying a house. After our free seminar, he was encouraged to apply and he did and just a couple of months later we closed on his new home. We did it with him paying off just $3,000 in debts, not $20,000 and that worked for him. He is now a walking advertisement for us, telling everyone he knows about our local Veterans United team and how we helped him. That’s the stuff we love about our jobs.
6. What resources are available for someone looking to purchase with a VA loan, other than a knowledgeable REALTOR?
There are lots of VA resources online and also a whole lot of inaccurate information on the Internet as well. This is a self-serving answer, but I think going directly to a VA lender for VA loan information is probably the shortest path to getting the correct answers and then getting pre-approved. And I am not referring to a lender who “can do” VA loans but rarely does them. I’m talking about someone who does VA loans every day so that you know they have the experience and expertise to best serve your veteran client.
7. How did you get into VA lending?
I served 4 years on active duty in the Marine Corps before attending the University of Texas McCombs School of Business where I graduated with honors and my finance degree. After working in finance in California for 5 years, I returned to Austin in 2004 and purchased a condo for my family using my VA loan. The process was not great and I thought I could do better, so I went into the mortgage business. My very first purchase loan was a VA loan for a retired couple who had lost their entire life savings to a corrupt financial adviser. So when it came to buying a house and trusting a lender, I had a lot of work to do. Long story short, it was such a great experience for them and for me, that it convinced me to focus my career on helping fellow veterans and I’ve never looked back. I was also discouraged by many in the industry to not do VA loans, but my finance background confirmed for me how much better VA is than anything else, so I went all in. Since that first VA loan, I’ve worked with thousands of military veterans and I have funded over $400MM in VA loans. It’s been such an honor being given this opportunity.
8. Is there an important point you’d like to add that I missed?
The Texas Veterans Housing Assistance Program or “VHAP” is also a very popular home loan program for Veterans and unfortunately, many of the top VA lenders do not even offer it. I’ve been financing Texas Vet loans for over ten years and I really enjoy helping veterans use the program that gives them a below market interest rate.
Basically, I get to represent the largest VA lender in the country every day and I fund VA loans across the state of Texas. Working with me and my local team here in Austin is NOT the same as working with our internet-only division in Missouri. Locally, I truly enjoy teaching VA classes to local Realtors and I highly encourage your agents to contact me for more information about my next training session in January.
Want to learn more about VA loans? Check out the list of events Chad is putting on in January here and remember that VA loans are a more convenient way for the veterans in your life to achieve the American dream of homeownership than ever before. Give his team a call today to find out how they can help.