Purchasing a home can be a stressful time for buyers, but the stress doesn't stop with the buyer. Real estate agents also experience stress when a transaction doesn't go as planned. Stress is expected, especially when your income is not based on showings, but closings.
Some agents are hesitant to work with VA buyers because they believe VA loans require more work and as a result, more stress. But this doesn't have to be the case.
Here are four tips for a stress free VA loan transaction.
The Department of Veterans Affairs established Minimum Property Requirements (MPRs) to ensure homes purchased using the VA loan guaranty are safe, structurally sound and sanitary. Being aware of the MPRs and noting any issues you notice during a walk-through can save your buyers a lot of time. Explain the purpose of the MPRs to your buyers and show them properties considered move-in ready. Avoiding properties requiring significant repairs can save your buyers time, money and a lot of stress.
Some agents may think that simply knowing the preapproval amount is enough, but really it just scratches the surface. You don't need to get into specifics on your buyer's finances -- that's the loan officer's job -- but you do need to have a good understanding of their overall financial situation.
VA loans have a qualification overlay in addition to the debt-to-income ratio called residual income. It's a specified amount of money the buyer must have leftover each month to cover expenses like food an clothing. The Department of Veterans Affairs established these figures based on location and household size. You need to know how changes in taxes and insurance or additional fees like a homeowners association could impact the buyer's residual and as a result their loan approval.
It's also important to have a general conversation with the loan officer regarding whether the buyer's can comfortably afford a certain loan amount or if the preapproval amount is the absolute max they can afford. When you start pushing up against the absolute maximum amount they can afford, small changes in things like taxes and insurance could push their loan over the edge into denial once the file hits an underwriter's desk.
The average VA purchase loan closed in 39 days in January 2015 (compared to 38 days for conventional and 42 days for FHA). Some VA loans will close much sooner and others may take longer. As you know, every transaction is unique.
Build in a little wiggle room in the closing date by requesting 45 days to close. You can always close earlier. Building in a few extra days will save you some time and stress if an issue arises. It may also avoid the necessity of going back to the seller with a request to extend the closing date.
Communicating with your buyer's loan officer prior to making an offer will help you better prepare and reduce the back-and-forth. A few things a loan officer may discuss with you include the following:
Do you have specific questions on the VA loan process or VA homebuyers? Feel free to reach out to me directly via email at email@example.com.
Answer a few questions below to speak with a specialist about what your military service has earned you.