VA Loans – Worth More Than You Think

One of our recent posts was about the first time homebuyer tax credit for the military. However, “post-posting” I found it was news to many people! It is an important word to spread so if you know anyone who qualifies it is a great home buying opportunity.

Which brings me to my next point; the advantages built into VA loans are way more robust than people may be aware. Ours is an industry fraught with misinformation; the worst case scenario is when a home buyer potentially misses out on getting the maximum benefit to which they are entitled.

For example, VA loans have a seller concession limit of 4% of the sale price. Here is a list of what that 4% can include:

  • Buyer’s funding fee
  • Prepaid Taxes and Insurance
  • Gifts (televisions, microwaves)
  • Interest Rate Buy-down (Payment of Discount Points)
  • Payoff of Credit Balances or Judgments on behalf of the buyer to help them qualify (How great is that?)

HOWEVER….not included in the 4% limitation are:

  • The payment of usual and customary closing costs (these are wide open for interpretation)
  • Normal discount  points (that aren’t for the purpose of buying down the interest rate)

So here’s a breakdown:

  • Home price $200,000
  • Sellers can pay $8000: (4%) worth of stuff from the first list AND
  • Sellers can pay an additional $4000 worth of stuff from the second list
  • Bottom line: $12,000 in costs that can be assumed by the seller, or 6% of the purchase price

That’s a lot of stuff! Give us a call if you require any additional information and please pass this along…there are tremendous advantages for the eligible.

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