Expert: Jim Root - 11/19/2007

Question
I am currently under contract to build a new home here in Florida. My loan officer does not service VA loan, however I am eligible and feel it would be a big benefit to go VA. How come so many loan places don't offer VA loans? I have called 5 or 6 places and all of them say they don't do them. I am getting the feeling that they are not profitable for the loan officers. Am I right about this, or just unlucky in my choices?

Answer
Lisa--First of all, "Thanks for your service to our Nation!" As for the matter of so many Lenders not working VA Home Loans, it's likely because the U.S. Government's requirements for "Lender Approval" to originate, process, underwrite & close home loans guaranteed by the VA are very "strict!" That is to say, a Lender must provide evidence of meeting various "standards" that include financial worth & strength, experienced/qualified staff personnel, physical facilities of certain size & location, etc! Lots of paperwork involved in a Lender's getting "VA-Approved!" Then continuous "monitoring" & "review" of the Lender's work on VA Home Loans follows! Add to that the fact that VA will not allow the Lender to charge the Veteran Borrower with some of the Loan/Closing Costs that can be paid by the Borrower in other Loan Programs & you see why VA's not very popular with m-a-n-y Mortgage Lenders!

Still, however, many of the b-i-g Mortgage Lenders offer VA loans--you should be able to find a VA-Approved Lender either locally or over the Internet! Even with Companies that do VA Loans, you may find Loan Officers (LO) who will either discourage you or refuse to originate a VA! Many LOs operate under a misconception that it takes "too long" to bring a VA Loan to closing, the VA Appraisal will "cause problems" because of "excessive" work requirements that "so many VA loans 'fall apart' and never close!" These misconceptions were "truth" some 10-15 years ago, but these days VA Loans can--and usually do--close in 30-45 days, work requirements are few and limited to things absolutely needed for health, safety or livability, & the "fall apart" rate has become minimal!

If you want to take advantage of your G.I. Home Loan Benefits, "going VA" is a good way to go! Zero Down/100% Financing, Loan/Closing Costs at a Minimum, Market Interest rates /Terms, etc!

But finding a Lender &/or LO to do your VA Home Loan CAN be difficult. Keep looking; you'll find a Lender and Loan Officer who'll work with you on this!

(NOTE:The FHA has a "Special" Loan Program for Veterans, too, but not ALL Lenders do FHA Loans either. Same reasons!you can go to www.fha.gov to find out about FHA Loans for New Construction &/or Veterans!)

GOOD LUCK, LISA--Jim