There’s a certain hierarchy when it comes to what home sellers are looking for in an offer. An all-cash offer is generally considered the strongest and most desirable because there is no loan required. Offers that involve government-backed loans like VA loans are often considered on the lower end of the spectrum, mostly because some people believe that VA loans make a deal harder to close. That may have been true at one point, but those days are long gone. Still, these beliefs persist. So, if you’re an active duty military member or veteran using a VA loan to buy a house, you’ll need to make sure your offer is as strong as possible to be accepted. Here are some tips on purchasing a house with a VA loan and crafting a winning offer.
What Makes a VA Loan Offer Different?
A VA loan is a benefit earned by military service members that entitles them to certain advantages when securing mortgages. For one, VA loans do not require a down payment and have lower credit requirements to secure the loan. This makes them extremely attractive to buyers, especially first-time home buyers. Also, they are guaranteed by the government, meaning lenders won’t take a loss if a buyer defaults on their mortgage. With all the benefits from VA loans for buyers and a guarantee for lenders, why are sellers still so wary to accept them?
Why are Sellers Put Off by VA Loans?
There are a number of reasons why some sellers aren’t as fond of VA loans, and they are based on outdated, false ideas. For starters, some sellers believe that VA loans are harder to close, or take an extremely long time. But this simply isn’t true. Data shows that VA loans actually close at slightly higher rates than conventional loans. Some lenders will have to go through the VA Home Loan Center to complete the sale. Some, on the other hand, have what’s called “non-supervised automatic authority”. This allows them to complete the loan unimpeded. So, there is no reason to expect any added delays. Some VA loans can actually close faster than conventional loans. It will be up to your agent and the seller’s agent to convince the seller that they have nothing to worry about. But just knowing where the seller may be coming from can help you craft a strong offer they accept.
How to Make a Strong Offer Using a VA Loan
Here are some tips for writing a strong offer on a home purchase using a VA loan:
- Put down extra earnest money – Earnest money is a type of security deposit that shows the seller your offer is serious. Typically, buyers will put down 1% of the home price in earnest money. But those using a VA loan to buy a house should consider putting down a little extra to give the sellers all the confidence they need to choose your offer.
- Include a pre-approval letter – When you submit your offer, be sure to include a pre-approval letter. Pre-approval letters shows you already have approval from the bank and will have no problem securing a loan. This can make the seller feel more comfortable that the process will go smoothly.
- Write a letter to the seller – Using a personal letter to increase the strength of your offer isn’t unique to VA loans. But it is still a good best practice to follow. Tell the seller how you feel about their house and what it could mean to your family. This can make the personal connection you need to beat out any other buyers.
- Waive certain contingencies – While you should never waive your right to a home inspection, if the seller is on the fence, forgoing certain contingencies can help seal the deal. This is certainly a better tactic with newer homes compared to an older home that may have more hidden issues. But talk to your agent and lender to see what makes sense for your unique situation.
- Make sure the home satisfies the VA’s Minimum Property Requirements – The VA has guidelines about the condition a home has to be in before they will provide a loan. Essentially, they just want to make sure the property is a safe and secure investment. Before you submit an offer, make sure the home you want to buy satisfies these requirements to ensure the process goes smoothly and quickly.
- Use an experienced VA lender – Working with someone more familiar with VA loans will help ensure you craft the strongest offer possible. You can find VA lenders by visiting www.benefits.va.gov, or consider working with Homes for Heroes. We can connect you to one of our affiliate lenders who specialize in helping heroes like you buy a home and can provide significant savings in the process.
Using a VA Loan to Buy a House
VA loans are a benefit you earned by dedicating your life to serving our country. So, it’s only right that you use this benefit to achieve the American dream and home ownership. By following these tips, you can craft the strongest offer possible, beat out other buyers and purchase the house you’ve always wanted.
Planning on using a VA loan to buy a house? Register with Homes for Heroes and you’ll get matched with an experienced real estate specialist who can help you navigate the home buying process and save an average of $2,400 in the process.