Answering Common Borrower Questions: “What Is the VA Loan?”

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Female service member embraces her family in front of their home.

Demystify this powerful path to homeownership.

The VA Loan is one of the most powerful loan programs on the market. You know that, but millions of potential borrowers might not. Some might pepper you with questions, from whether they qualify to how they can maximize the benefits, while others simply don’t know what they don’t know.


Either way, the VA Loan is a great opportunity to step up and impart some wisdom.


So, let’s dive into some of the most common borrower questions surrounding the VA Loan and their comprehensive answers:

“Who Qualifies for the VA Loan?”

Before you even begin discussing the program itself, you’ll want to review eligibility. After all, you wouldn’t want to get a client’s hopes up only to find that the program isn’t an option!


Ask a few guiding questions to start the conversation and help determine eligibility. These might include:

  • When did you serve?
  • How long did you serve?
  • Why were you discharged?
  • Are you the surviving spouse of a veteran?


If a VA loan is looking like a real possibility for a particular client, walk them through the certificate of eligibility process. Remember that education is key here, so try to avoid simply requesting this document or that one. Explain why you need this information, where you plan to submit it, and how it fits into the overall home loan puzzle. The client, and their level of financial knowledge, will be better for it!

“What Is the VA Loan and Why Is It So Valuable?”

Of course, you know just how valuable the VA Loan is, but many veterans and active servicemembers simply don’t. In fact, millions of veterans are completely unaware of many of the benefits they might qualify for, including this powerful path toward homeownership. That means it’s your job to showcase the benefits.


So, start simple: Explain that the VA Loan’s primary goal is connecting veterans with homes. This incredible program is a benefit for their service.


Then, dive into the many benefits eligible borrowers could receive. You’re probably well aware that some of the most enticing tend to include:

  • 0% down. No need to spend years saving up! Their dream home could potentially be well within reach.
  • Competitively low interest rates. Perhaps pull out a pen and paper to illustrate just how much the client could potentially save with a more favorable interest rate. The average layperson doesn’t fully understand the power of compound interest.
  • Fewer closing costs. With 0% down and limited closing costs, many of the immediate hurdles are typically removed. This means clients could get into their dream homes that much faster.
  • No private mortgage insurance (PMI). Consider sharing ballpark numbers for your area. Facts and figures can help the savings seem that much more real.

“Can I Use the VA Loan More Than Once?”

It’s time to deliver more good news. Borrowers might find this program so nice; they’ll want to use it twice (or more!).


Don’t forget to mention that there is no limit on the number of times one borrower can access the VA Loan.


Thoroughly explain the VA entitlement, though. This concept can be confusing even among mortgage pros, so break it down as simply and as often as necessary. Here’s a sample script you can use as a starting point:


“The entitlement is a set dollar amount that the VA agrees to pay the lender if you default on your loan. This is typically one-quarter of the total loan amount, up to $36,000. In higher cost-of-living areas, though, borrowers can access a bonus entitlement. The bonus entitlement is based on the cost of living in the market and any loan limits set by the VA.


As you pay off your loan or if you sell your home, your entitlement is restored. It can then be used again to purchase another property with the VA Loan.


You don’t have to use all of your entitlement on one purchase, though. For example, maybe you buy a home using only $20,000 of your entitlement. You could theoretically make another purchase using the other $16,000.”


Tailor your approach to the situation at hand and consider using real-world numbers to maximize understanding.

“Will I Pay Out-of-Pocket Costs with a VA Loan?”

The VA Loan offers many opportunities to save money, but it is important to always ensure to arm clients with basic knowledge when it comes to closing costs.


Break down what they can reasonably expect to pay for, with potential line items including:


  • Loan origination fee
  • Appraisal fee
  • Title examination and title insurance
  • Recording fees
  • VA funding fee
  • Home inspection fee
  • Property taxes
  • Homeowner’s insurance
  • Prepaid interest


If clients start to balk, consider reminding them that they won’t be typically responsible for costs like broker fees or commissions, lender document preparation fees, or charges for attorney services when the attorney represents the lender. Plus, they’ll likely be saving big on interest and PMI.


If eligible borrowers still aren’t sold on the benefits of a VA loan, you can also walk them through other options such as FHA and Conventional loan solutions. A quick comparison of other loan options can potentially drive home just how powerful the VA loan can be.


Essentially, at this stage, just reiterate that the benefits usually far outweigh the costs when it comes to the VA Loan!

“How Can I Maximize the Benefits of the VA Loan?”

When borrowers realize how powerful this program really is, it’s no wonder they’ll probably want to make the most of it. Use your knowledge of the borrowers’ unique situation to guide your advice, whether that be eventually refinancing, exploring investment properties, using their benefits to assist family members, or simply holding onto their home and focusing on making regular payments in the long term.


Whatever the case may be, let your expertise shine here. The client is sure to thank you!

The VA Loan: Everything Your Borrowers Need to Know

So, there you have it: Some of the most common borrower questions relating to the VA Loan, their comprehensive answers, and a few opportunities for you to go above and beyond. At the end of the day, this program is highly valuable in the mortgage marketplace — don’t let your clients forget it.


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