VA Loans Gain Popularity as FHA Costs Rise
The Veterans Affairs loan program – which has long been saddled with low participation rates – is garnering more attention. For fiscal year 2013, VA lenders originated a record 629,300 single-family loans.
More military members are reaching for VA loans at a time when sharp increases in Federal Housing Administration mortgage premiums have made FHA loans less attractive, says Megan Booth, senior policy representative at the National Association of REALTORS®.
Real estate professionals and lenders have stepped up efforts to educate military members about the availability of VA loans.
Less than 12 percent of the 16.4 million active-duty service members and military veterans with a mortgage have a loan guaranteed by the Department of Veterans Affairs.
Some housing experts blame it on the lack of promotion of the VA loan program, in which some say that loan officers don’t even ask potential clients if they are veterans.
“There are a lot of misconceptions about the VA home loan program among real estate, lending, and housing professionals,” says Son Nguyen, president of the Veterans Association of Real Estate Professionals.
David Gibbons, the national VA mortgage program manager at Wells Fargo Home Mortgage, says that there is a large percentage of people who are eligible for a VA loan but choose not to use it because they don’t understand it. “That is where education and outreach could be effective,” Gibbons says.
The Department of Veterans Affairs is recently taking efforts to make its loan process more efficient for buyers and housing industry professionals, like real estate professionals and lenders. For example, an automated underwriting system is being evaluated to help make credit risk assessments more seamless as well as addressing steps to speed up the appraisal process. The VA is the only agency that is required by law to maintain a panel of appraisers and assign work on a rotational basis.
Source: “Underused VA Mortgage Program Makes Inroads as FHA Costs Rise,” National Mortgage News (June 11, 2014)