VA Construction Loans

Introduction

Due to the changing mortgage environment, we are currently not offering VA Construction loans at this time.

This section of the website is designed to help veterans planning to purchase or construct homes, particularly those veterans who intend to finance with VA home loans.

The most important topics discussed are:

  • The cost of homeownership;
  • Finding a suitable and affordable home;
  • The agreement to purchase the home;
  • Closing the loan (final settlement); and
  • Before and after moving day.

We try not to discuss the arguments for or against homeownership. It is up to each veteran to decide whether homeownership is best for his or her family.

This information does not apply to manufactured (mobile) homes. See VA Pamphlet 26-71-1 for information about this type of home. See VA Pamphlet 26-4 for details about VA-guaranteed loans.

Since the end of World War II more than 14 million veterans have bought homes with the aid of VA loans. The great majority of these veterans have bought soundly constructed homes and are now making regular payments on their mortgages as satisfied homeowners.

However, a very small percentage of these veterans have had just cause to be dissatisfied with the outcome of their venture into homeownership. It is hoped that by stressing the important things that a prospective homeowner should know, we will help to reduce the number of these cases in the future.

WHAT VA DOES FOR THE HOME-BUYING VETERAN

VA guarantees part of your loan–which helps you to get a VA loan featuring:

  • No downpayment (unless required by the lender or the purchase price exceeds the reasonable value as determined by VA); and
  • Competitive interest rate and the flexibility of negotiating interest rates with the lender;
  • Assurance that you can pay off all or part of the loan in advance without penalty.
  • VA appraises the house to determine its reasonable value in the housing market at the time the appraisal is made.

VA requires compliance inspections in most cases on proposed new construction to see that the house:

  • Meets accepted standards of good construction.
  • Conforms to the plans and specifications on which VA’s appraisal is based.

VA will try to assist you in getting your builder to correct any defects about which you may have valid complaints.

WHAT VA DOES NOT DO

VA does not have the legal authority to:

  • Act as your architect. It does not supervise construction of the house you buy.
  • Guarantee that the house is free of defects.
  • Act as your attorney. It cannot provide you legal services if you run into trouble in buying or constructing your home.

VA cannot compel a builder to remedy defects in construction or otherwise compel the builder to live up to a contract with you.

VA cannot guarantee that you will be completely satisfied with the house, or that you can resell it at the price you paid.

VA cannot guarantee that you are making a good investment. That is a decision which only you can make.

DO NOT BE MISLED

VA does not guarantee the CONDITION of the house which you are buying, whether it is new or previously occupied. VA guarantees only the LOAN. You may talk to many people when you are in the process of buying a house. Particularly with a previously occupied house, you may pick up the impression along the way that you need not be overly concerned about any needed repairs or hidden defects since VA will be sure to find them and require them to be repaired. This is NOT TRUE! In every case, ultimately, it is your responsibility to be an informed buyer and to assure yourself that what you are buying is satisfactory to you in all respects. Remember, VA guarantees only the loan – NOT the condition of the house.

If you have any doubts about the condition of the house which you are buying, it is in your best interest to seek expert advice before you legally commit yourself in a purchase agreement. Particularly with a previously occupied house, most sellers and their real estate agents are willing to permit you, at your expense, to arrange for an inspection by a qualified residential inspection service. Also, most sellers and agents are willing to negotiate with you concerning what repairs are to be included in the purchase agreement. Steps of this kind can prevent many later problems, disagreements, and major disappointments.

 

Guide to VA Loans

Introduction

The main purpose of the VA home loan program is to help veterans finance the purchase of homes with favorable loan terms and at a rate of interest which is competitive with the rate charged on other type of mortgage loans. For VA housing loan purposes, the term “veteran” includes certain members of the Selected Reserve, active duty service personnel and certain categories of spouses.

This guide should help you to understand what VA can and cannot do for the home purchaser. However, it is not a legal document and should not be interpreted as one Nothing should be taken as a change of law or regulations. The pamphlet does not attempt to go into detail or into unusual problems. Information about VA loans is given in a narrative format followed by questions and answers in those areas of the greatest concern.

It is suggested that the pamphlet be read in its entirety. Please pay particular attention to the information about:

  1. your responsibility to determine the condition of the property you purchase, and
  2. assumption of your VA loan and obtaining a release of liability.

Any questions you have which are not answered here should be referred to the Loan Guaranty Division at the nearest VA regional office, or to your lender who will take them up with VA if necessary. A list of VA offices may be found in the Help section.

6 STEPS IN ARRANGING A VETERAN’S GUARANTEED LOAN

  1. Find the property suitable for your needs.
  2. Go to a lender, and apply for the loan.
  3. Present your discharge or separation papers relating to latest period of service and/or a Certificate of Eligibility.
  4. Property is appraised by approved appraiser.
  5. Estimate of property’s reasonable value is determined.
  6. If application is approved, you get the loan.

 

VA Loan Articles

Read About News, Updates, and Guidelines

:: VA Loans and Estate Agent/Broker Fees

Whether you went searching for an agent or came in contact with one at an open house or similar venue, agents and brokers can be helpful for some people looking for that perfect neighborhood.

 

If you seek lower monthly payments and a lower interest rate on an existing VA home loan, the VA Interest Rate Reduction Refinancing Loan or IRRRL is designed to help.

 

The Department of Veterans Affairs has been making interesting strides in its use of Twitter and other social media to help VA borrowers understand their benefits. The VA recently held the second-ever Twitter Town Hall Meeting on veterans benefit topics.

 

VA field offices handle all sorts of common questions about VA mortgages. One of the common topics is related to what happens to a VA loan or the ability to apply for one after divorce.

 

There are many questions about VA loans and funding fees. Some borrowers find themselves in situations where they realize they weren’t required to pay the funding fee but due to an oversight there were charged anyway.

Overview of the VA Loan Program

Five Easy Steps to a VA Loan

The more you know about our home loan program, the more you will realize how little “red tape” there really is in getting a VA loan. These loans are often made without any down payment at all, and frequently offer lower interest rates than ordinarily available with other kinds of loans. Aside from the veteran’s certificate of eligibility and the VA-assigned appraisal, the application process is not much different than any other type of mortgage loan. And if the lender is approved for automatic processing, as more and more lenders are now, a buyer’s loan can be processed and closed by the lender without waiting for VA’s approval of the credit application.

Additionally, if the lender is approved under VA’s Lender Appraisal Processing Program (LAPP), the lender may review the appraisal completed by a VA-assigned appraiser and close the loan on the basis of that review. The LAPP process can further speed the time to loan closing.

  1. Apply for a Certificate of Eligibility. A veteran who doesn’t have a certificate can obtain one easily by completing VA Form 26-1880, Request for a Certificate of Eligibility for VA Home Loan Benefits and submitting it to one of the VA Eligibility Centers with copies of your most recent discharge or separation papers covering active military duty since September 16, 1940, which show active duty dates and type of discharge.
  2. Decide on a home the buyer wants to buy and sign a purchase agreement
  3. Order an appraisal from VA. (Usually this is done by the lender.) Most VA regional offices offer a “speed-up” telephone appraisal system. Call the local VA office for details.
  4. Apply to a mortgage lender for the loan. While the appraisal is being done, the lender (mortgage company, savings and loan, bank, etc.) can be gathering credit and income information. If the lender is authorized by VA to do automatic processing, upon receipt of the VA or LAPP appraised value determination, the loan can be approved and closed without waiting for VA’s review of the credit application. For loans that must first be approved by VA, the lender will send the application to the local VA office, which will notify the lender of its decision.
  5. Close the loan and the buyer moves in.

4 Ways to Hater-Proof Your Listing

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In my experience, there’s one fundamental truth about haters: you can never fully escape them. The only way to live a 100% hater-free life is to never stick your neck out, and never do anything because, as the saying goes, you simply cannot please all of the people all of the time.

And this is particularly true with real estate and putting your listings on the market – because homes, locations, aesthetics and such are so much a matter of personal preference, some people will find something to criticize about even the most perfectly staged, priciest properties on the market.

As a listing agent, your job is not to try to make your listings be all things to all people – but you do want it to appeal to enough buyers that you get one great offer (and multiple offers never hurt anybody, either). That said, you don’t want your listing to be the house that nearly every buyer and broker sees, rolls their eyes and utters the same few, predictable deal-killing criticisms.

Fortunately, what is predictable is avoidable. Unfortunately, many of the things that make a listing susceptible to haters are issues on the seller’sside of the property preparation responsibilities. Let’s explore the most common things buyers hate about listings they see. In the process, you’ll get equipped with things you can say to your sellers to help sidestep those issues and, in large part, hater-proof your own listing.

House Hater Complaint #1: Odors.

You might think I’m beating a dead horse, here, or even preaching to the choir. But as long as house hunters keep emailing me to ask why, in the name of all that is sacred, they keep seeing homes that smell like all sorts of madness and mayhem, I’m going to keep repeating this message.

Viewing a home sounds like it’s all about the visual of the experience. And visuals are critical – your listing should be in its Sunday best, so to speak, when it’s being shown, in terms of being spruced, staged and clutter-free. But when a buyer comes to see your listing, they don’t turn off the rest of their senses. And there is nothing that can turn a buyer off from a home they’d otherwise like more quickly than a powerfully bad odor.

In particular, cigarette and pet odors in a house that seems to have been well-cleaned create the concern that they might be permanent and that the buyer might not be able to get rid of them without dropping some serious cash on cleaning or even removing wall, window and floor coverings.

If you are listing a home and you know that someone has been habitually smoking in it home or that the seller has had a “challenge,” let’s say, with pet accidents, do not ignore the problem. And do not think that because you had the carpet shampooed or the drapes cleaned, or because YOU can’t smell anything, that the problem is gone.  The human sense of smell very quickly gets used to smells that it lives with or is surrounded with on a regular basis.

It’s one of the tougher parts of your job as an agent to point out bad smells and odors, no matter how painful the conversation and make sure they are eradicated by any means necessary, before you place your listings on the market.

House Hater Complaint #2: Glaringly extreme overpricing.

There’s the kind of overpricing that makes a buyer say, “Hmmm – seems a bit high. Let’s go see it, but we might have to offer a little less than the asking price if we like it.”  Then there’s the kind of overpricing that makes buyer say “I’ll wait until a price reduction” or worse, hold their sides from laughing.

When overpricing is glaring, many buyers and buyer’s brokers will comment on it or inquire about it. What they are less likely to do is actually come out and see the place – especially if they weed it out online after comparing its specs to all the other homes in the area and the price range.  Often, homes this severely overpriced simply don’t sell, or not until after they’ve had some serious price cuts or have been on the market so long buyers begin to feel confident about making lowball offers.

In fact, the goal is the opposite – you want your listing to stand out as a property that is not dirt cheap, but does present a good value for the money – that’s what motivates buyers to get out of their chairs and into the property for a viewing.

Obviously, you don’t set the price of your listings. It’s also obvious that the agent-seller conflict about overpricing is one of those battles that have been fought since Adam and Eve sought to list the Garden of Eden.

Here’s how to hater-proof your home’s listing against this issue: force your sellers to fixate on the comps. Smart sellers deactivate their emotional attachment and very human tendency to overvalue their precious homes by poring over the sales prices (not list prices) of similar, nearby homes that have recently sold. Walk them through this data – don’t forget to show them the overpriced listings that are lagging on the market, and any value-priced listings that have sold for way more than asking.

When you get a seller who simply won’t budge off a dramatically high list price:

(a) get them to sign a reduction addendum that will automatically kick in after 30 or 45 days on the market, and/or

(b) consider whether this listing makes sense to take in the first place.

Also, consider using your broker’s first Open House as an additional hater-proof measure: if the agents overwhelmingly comment that they think the home is significantly overpriced, communicate this feedback to your seller.

House Hater Complaint #3: Dirt and messes.

Possibly the single largest source of House Hater Complaints I’ve ever heard are the dirt, messes, piles and personal belongings that buyers find so distracting, when they walk into a home for a viewing or Open House. Obviously, homes that are filthy from floor to ceiling are fertile fodder for haters, but often those homes are bank-owned or otherwise distressed so that the sellers aren’t likely to do much.  What is underestimated is how often even savvy home buyers are distracted (and disgusted) by relatively clean homes that just have a few outstanding messes, like piles of dirty dishes in the sink, piles of dog poo in the yard or even piles of papers, mail, books or clothes lying out in plain view.

Will one or two such items ruin the sale of your home? Perhaps not. But a few of them (or more) can certainly distract a buyer enough that they fixate on the home’s messes and, in the process, fail to see what is so great about your property.  As I see it, cleaning up, meticulously, before every single showing is free – so it makes no sense to even run the risk of turning off a prospective buyer by letting messes get in the way of their ability to visualize themselves and their families flourishing in your home.

Make sure you brief the sellers in detail on what buyers expect, in the way of cleanliness.  Also, set up a plan for giving them enough notice of showing appointments that they can do a quick, but thorough, house cleaning pass through before every single viewing.

House Hater Complaint #4: Lots of little malfunctions.

All of us tend to think our homes are in fantastic condition.  After all, your sellers have had the furnace maintained regularly, they’ve installed granite and dual paned windows – maybe they even took your advice to have the floors refinished or the walls painted in preparation for putting the place on the market.

That’s all fantastic – all the non-cosmetic work that’s been done to maintain and improve your listing should be trumpeted in your marketing materials, and the cosmetic items will (or should) speak for themselves. But here’s the thing: houe hunters won’t be running the dishwasher or testing the furnace (at least not until inspections).

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Help A Buyer Out: 5 Tips Sellers Would give Buyers if they Could

The conventional wisdom is that buyers and sellers go together like oil and water. That is to say, they don’t go together at all. Some say they are at odds simply by virtue of sitting across the bargaining table from one another, which – along with negotiation and legal issues that are par for the home buying course – create the presumption that they want totally different things.

The prime example of competing buyer and seller interests is this: the buyer wants to pay as little as possible, while the seller wants to get top dollar for the place. But there is another way to look at this entirely.  In fact, there’s a point of view from which the buyer and the seller want exactly the same thing:  the buyer wants to buy the place, and the seller wants to sell it to them!  And I’ve seen many buyers and sellers act cooperatively to achieve just that result.

Nevertheless, there are things that sellers can see from their side of the table that you cannot. Sellers have insights into their own mindsets that, if revealed, can be very powerful tools in helping buyers optimize their approach, offer and interactions with the seller to both buyer’s and seller’s benefit. So, in the interest of helping both buyers and sellers move closer to an outcome that helps them both achieve their mutual goal, here are a few of the insider secrets from the seller’s side of the bargaining table that they would tell buyers, if they could.

  1.    Trashing my house doesn’t make me want to sell it to you at a discount.  To a seller, their home is their castle. It’s the place where they’ve raised their children, and has been the backdrop for many of their memories. It’s the asset into which they’ve invested the lion’s share of their time and money, sometimes for years.  It’s an intensive expression of their personal tastes.  And it’s also the asset they must convert into as much money as possible to move forward with the next phase of their lives.

All that said, the average seller knows most things about their home that you can see with the naked eye.  So if you, as a buyer, think trash talking a home, pointing out obvious flaws or issues is a good strategy for getting the price down, rest assured that you are not telling the seller anything they didn’t already know when they set the list price. In fact, you might very well be doing your case more harm than good, as this “strategy” is highly likely to alienate and insult the seller whose cooperation you seek.

If you feel strongly that something about a place makes it less valuable than the comparables the seller seems to have based the list price on, work with your agent on how best to communicate your offer price rationale to the listing agent in a way that is diplomatic and fact-based.

    2.    Knowing that you have cash makes me feel comfortable taking your offer.  With distressed properties, over-asking multiple offers, and the generally warm-to-hot seller’s market in many areas, it has become increasingly common for sellers to request proof of a buyer’s “cash to close.” (This usually takes the form of bank or other asset account statements, with the sensitive account number information blacked out for security purposes.)

Some buyers in competitive situations have begun to proactively offer such proof, even when it hasn’t been requested, and even for non-cash offers.

Other buyers, though, take offense. Why shouldn’t the mortgage pre-approval letter be enough?  Why should you have to jump through yet one more documentation hoop?  Is the seller just plain nosy? Why are they all in your business?

One word: comfort. Over the last few years, the number of home sale transactions that went into – and fell out of – escrow due to last minute loan problems of pre-approved buyers hit a record high. While this is awful for buyers to go through, it’s even more disruptive for sellers, who are relying on the transaction to close in the time frame the buyer provided to move forward with their own lives. It’s also a worst case scenario for a seller who had 5 offers on the table to choose one and then have it fall out of escrow later on.

And sellers’ agents know this – often, the issues which derail a buyer’s loan can be resolved with money, extra cash down, extra cash at closing, extra cash to put in escrow for post-closing repairs required by the lender or the city.  So, proving that you have more cash than you appear to need to close the deal doesn’t necessarily set you up for the seller to ask for more cash – but it might help them feel that you’re the buyer most likely to sidestep mortgage obstacles and seal the deal.

 3.    It’s all about the Benjamins – but close-ability is a close second.  Buyers be on notice – all the love letters, cute dog pics and cookies in the world will not make your offer win out over others that are offering significantly higher than yours, financially speaking.  Now, please don’t write in telling me about the case of your cousin’s dog groomer’s tarot card reader who got a home for less than 10 other offers because she helped the little old lady seller take her garbage cans to the curb – most little old ladies need cash to get through their later years.

There is always an exception to the rule, and it does sometimes happen that a seller will take a slightly lower offer than the highest for one reason or another.  But if you’re trying to create a plan that stacks the decks in your favor in a multiple offer situation, your first priority should be to offer as much as you can, without spending beyond what is affordable for you and beyond the home’s fair market value.

That said, sellers also care – a lot – about how likely the offer they accept is to close escrow.  And when multiple offers get so numerous and so frenzied that buyers seem to be throwing money at a home, smart sellers pay attention to the fact that their home might very well not appraise at a crazily high price and focus on offers that seem realistic and close-able, which can mean offers below the highest.

Approval letters, proof of cash to close, the professionalism with which the offer is prepared and presented (see below), and even things like your credit score, your choice of mortgage broker/professional – all these things contribute to or detract from a seller’s estimation of how close-able your offer is.  If you’re competing against other offers, you should be maxing out both your price and your offer’s close-ability, as evidenced by these characteristics.

4.    Your agent represents you to the world of sellers.
  Choose wisely.  See above. A buyer’s broker or agent has a lot of influence on whether the transaction closes, and how smooth or bumpy the ride is. If your agent’s level of professionalism is lacking, it will show – and listing agents might actually rank your offer below others, in terms of close-ability.  If your agent’s level of professionalism is stellar, the opposite can occur.

Before you choose an agent, ask around your circle of friends and do a little online searching or even calls to past clients to see what you can find out about their reputation for professionalism.

5.    Ask nicely – the old “flies with honey” adage is true. 
The conventional narrative about buyers and sellers is that they are adversaries. But I’ve been around this block a few times, and I think the average buyer would be absolutely gobsmacked at the number of times sellers are actually ready, willing and able to agree to their requests throughout a transaction. This is especially the case where:

  1. the buyers’ requests are reasonable and not nickel-and-dime nitpicks
  2. the buyers phrase their requests nicely, and
  3. the buyers have been living up to their end of the bargain throughout the course of the transaction.

Compare this with buyers who try to hold sellers hostage to their requests with the threat that they’ll kill the deal if the seller doesn’t do every single penny-ante thing the buyer wants.

I’ve seen sellers agree to leave valuable personal property behind, have repairs made, give thousands of dollars in repair credits or price reductions after a concerning inspection report – despite a hot seller’s market – all because they were good people, could afford to, and the buyer’s approach was more sweet than it was sour.