The VA loan benefit offered to military personnel can be a phenomenal option for purchasing a home. In addition to less restrictive credit quidelines, the program also offers no down payment options. However, to truly take advantage of the program, you should work with a real estate agent who understands all of the perks associated with VA loans, and how to maximize their potential.
In conjunction with the no down payment option of the VA loan, an experienced real estate agent can construct your offer on a home in such a way that you could purchase a home with almost no money out of pocket. This includes any applicable closing costs, which can be paid for by the seller if negotiated.
VA Loan Benefit[/caption]To take advantage of this financing, your real estate agent should be aware that buyers using VA loans are currently allowed to have the seller pay 4% of the purchase price towards to buyer's closing costs. In Maryland this will typically cover all of the buyer's costs. However, a real estate agent that is not familiar with VA loans may assume the buyer is only allowed to receive 3% of the purchase price towards their closing costs, which is the case with some other loan types. On the purchase of a $400,000 home, a real estate agent not looking to maximize this closing credit could cost his or her client $4,000.
Another consideration is that there are certain expenses that VA loan borrowers are not allowed to pay for in Maryland. For instance, the MAR contract used by most real estate agents expressly states that home buyers using a VA loan cannot pay for the termite/wood destroying insect inspection. If a buyer's agent does not know this, they may not complete the other forms in the contract properly and that could lead to complications at settlement and an argument as to who will pay this expense.
If you are working with a real estate agent who is familiar with and well-versed in VA loan restrictions and guidelines, you can maximize your VA loan benefit to take advantage of all of the tremendous perks of this type of financing. However, if you work with a real estate agent who is not familiar with VA loans, you could be leaving thousands of dollars on the table.