Can using a VA Loan actually hurt your chances at achieving the American Dream of home ownership?
For most people, buying a first home is a positive experience, but some military families the process has been more like a nightmare. The one thing those families have in common the VA loan.
The Poulson’s Story and VA Loans: American Dream or Frustration?
For Tammy and Robert Poulson, the idea of buying a brand-new home was an exciting. Tammy said, “We’re gonna look at all these different houses and we’re gonna choose the best one.” Apartment hopping and saving cash for 15 years, the couple thought they were ready. The interest rates and everything about the house was perfect, and they had the money needed.
Robert served in the military for 23 years, so naturally the couple turned to the VA for financing. They thought the strict vetting process to secure a VA loan would be the biggest challenge, but never imagined the hardest part still lied ahead.
Tammy noticed all the financing options didn’t include the VA. Instead they asked for alternate types of financing like FHA or conventional cash. Selling agent after selling agent told them a VA loan takes too long to close. So they kept looking, ultimately submitting offers on four different homes with competitive bids of up to $10,000 above asking price. Each time they got their hopes up only to be denied.
Robert and Tammy were frustrated. Robert said, “It was just at a point where I really just wanted to give up and just move on to another apartment.”
A VA loan offers veteran families no down payment, lower interest rates, and no private mortgage insurance. But the couple said those benefits mean nothing if it can’t be put to use.
“After a while it’s like it becomes pretty much unbearable. Like there’s something wrong,” said Tammy.
Is There Something Wrong With VA Loans?
It’s a struggle some real estate agents say has intensified in a hot housing market. Real estate agent Mike Procissi has seen examples where VA offers were put in that were substantially higher than conventional loans, yet the sellers still went with the conventional loan.
In the last year, Processi, a veteran himself, says he’s worked with seven families looking to secure a home using a VA loan, and only two of them were successful. The other five either switched to alternative financing, or followed the same path Navy veteran Katelyn Arp did, and bowed out of the process altogether.
The Arp’s Story: Bowing Out Of The VA Loan Process
Katelyn talks about how she felt. “We gave up four and six years of our lives, you know, and I’m still in an apartment.” Arp says she and her husband Zach, also a Navy vet, were excited to use a VA loan. They spent nearly a year looking for their very first home, but ultimately hit a wall.
“This is just a dead-end street,” Arp said. “At one point I even called my realtor and I said I can’t do it anymore. I can’t get my hopes up and then be told, no, we can’t do this.”
Some real estate agents and lenders believe resistance comes from misconceptions about how the VA loan process works. Certain people have a preconceived notion that using a VA loan is hard, although it’s really not. You can close a VA loan in the same amount of time as a conventional loan. Perhaps it’s simply a matter of insuring people are properly educated on VA loans.
Two Stories, One Happy Ending (So Far)
Good news for the Poulson’s is that they’re finally under contract for a home using a VA loan. The Arps, however, are still looking for that big break. They say what would be most helpful is compassion from those who want to support veterans, and opening up your home to allow for VA financing.
In case you’re interested, here’s a video of their journey so far, care of Wxyz Detroit: