VA Home Loans Gain In Popularity, But The Challenges For Home Buyers Remain
More homebuyers are using Veterans Affairs home loans than ever before, but advocates say misconceptions and bureaucracy still present significant barriers for veterans wishing to use the program.
“For many sellers, accepting an offer with a VA guaranteed loan is seen as too burdensome and risky in terms of meeting appraisal standards and having an extended timeframe to close a sale,” said Emily DeVito, associate director of national legislation for veterans of foreign wars. Services, during testimony before the House Veterans Affairs Committee on Wednesday.
One of the most popular and well-known benefits for American veterans is the home loan program. Eligible individuals can benefit from lower interest rates, lower closing costs, and often do not need to make a down payment to finalize loans.
In fiscal 2021, ministry officials guaranteed more than 1.44 million loans valued at around $ 447 billion, a new record and up 15% from the previous fiscal year.
John Bell, acting executive director of the VA loan guarantee department, attributed the jump to “historically low interest rates boosting demand and rising home values boosting sales.”
But he also acknowledged that potential buyers are still having trouble using the program.
“Misperceptions persist among salespeople and sales agents that VA financing is less than desirable than conventional loans,” he told committee members. “We believe that more industry education is needed to break the stigma that veterans are nothing less than highly competitive borrowers using a financially secure loan program.”
A survey conducted earlier this year by the National Association of Realtors found that only 39% of sellers were likely to accept a VA home loan for their home, compared to 89% who would take a conventional home loan.
Leslie Rouda Smith, president of NAR, said her organization is working to improve loan perception and make it easier for realtors to navigate the special process.
“Every state is different and… [any complication] could derail the process, where the seller goes to the next person, ”she said. “But I also know that there are also sellers who will go out of their way to sell their homes to a veteran, and a lot of proud real estate agents who would love to see our veterans have a roof over their heads.”
Other advocates have said that the negative perception of the program is part of the problem, but so are the onerous demands on it.
For example, typical home appraisals done before loan approvals take a few business days. Bell said that VA-authorized appraisals average 14.8 business days, potentially slowing the home buying process significantly.
Additional waivers for the home loan process – to allow buyers to go slightly above home valuations in their offers, for example – would make the program more competitive and desirable for veterans navigating the housing market.
And Rouda Smith said fee limitations for realtors also played a role in concerns about the program. She and Bell have both said they are working on this issue, trying to find ways to improve compensation for salespeople without hurting veterans financially.
Bell said VA officials were working with advocates and Congress on potential changes. Lawmakers have said they will continue to monitor this work in the months to come.
Leo covers Congress, Veterans Affairs and the White House for Military Times. He has covered Washington, DC since 2004, focusing on policies relating to military personnel and veterans. His work has earned him numerous honors, including a 2009 Polk Award, a 2010 National Headliner Award, the IAVA Leadership in Journalism Award, and the VFW News Media Award.