Buying a home is a stressful process today due to low inventory of both existing and new homes. The market will correct itself in time; we’ve been here before but for the time being, we have to deal with it.
Not only are you competing with low inventory, but you are also competing with institutional buyers who are offering cash with no contingencies. It is reported, in some markets, institutional investors are buying 10-20% of available homes for sale, particularly in the under $300k range. Institutional investors want you to rent rather than buy.
Buyers using any type of financing are at a disadvantage; especially those using VA as any level of water damaged wood requires repair as a loan condition. Your real estate agent knows this, and they know it will take a little luck and a lot of sweat to help you secure a home today. You should applaud those agents who are willing to battle on your behalf. If you need a real estate agent who is willing to work hard on your behalf, we would be happy to refer one for you.
Useful Tips on Securing Your Home With a VA Loan:
1. Get a Preapproval Letter
First, we must eliminate the belief that a VA loan takes longer to close! To reduce the typical 57 day closing under the VA, you must get a preapproval letter from a mortgage broker who specializes in VA loans. Note, this is not the same as a prequalification letter. A preapproval is a more specific estimate of what you can borrow, and this requires you submit all financial background such as W2’s, pay stubs, bank statements and tax returns. In other words, you are giving the lender everything they need to approve a loan – upfront. This should save three weeks in the normal process and put you closer to a 30-day close which is in line with conventional financing.
Once you have the preapproval letter, you will have the most accurate estimate of how much you can borrow and conversely, how much you can pay monthly for a mortgage including taxes and insurance.
A preapproval letter also serves to alert your real estate agent and a potential seller that you can qualify and close on the sale! In today’s hot market, sellers don’t need to risk losing time or money on buyers who may not eventually close.
*Tip: You must work with a VA loan broker who understands VA loans! You won’t find this person with big name banks. We would be happy to provide a referral if you need a good VA mortgage broker.
We must deal with inspections! The majority of resale homes (existing sales) today have some water damaged wood somewhere. Older homes probably have water staining or minor damage from termites or powderpost beetles. In a normal market, this is rarely a deal killer but today, sellers are often reluctant to make any repairs. For the VA buyer, this could mean your loan won’t be approved when it is reported in the WDO report or by the bank appraiser. While I don’t agree with this policy and it is not supported by any mycological, entomological or building science, it is the VA, so we have to deal with it.
In Florida the WDO inspection must be conducted by a licensed WDO inspector (wood destroying organisms). The inspector must follow the guidelines issued by the Florida Department of Agriculture & Consumer Services (FDACS). FDACS requires the inspector to report Evidence, Damage and Live Activity of any wood destroying insect and listed organisms such as brown or white wood rot. Often, WDO inspectors report minor water damage as an organism even when it is not. While that may be combatted by using a qualified inspector who knows the difference, the VA has thwarted that commonsense response by directing bank property appraisers to report any evidence of water damage even if it is on a shed in the back yard…again, it’s the VA so we have to deal with it and the way we do that is by:
- Treating the water damaged wood so you can get a “clean” WDO report. With the consent of all parties, and assuming you use a licensed pest control company who will conduct the WDO inspection and treat the damage, you can negate the need to replace minor water damaged wood. While I always recommend replacement or repair of water damaged wood (often minor repair is all that is needed), this is something you can do after you own the home as normal maintenance.
- Chemicals such as BoraCare or Timbor will kill any organisms which cause white or brown wood rot, and it is an approved treatment by FDACS for these organisms.
How We Can Help
Our companies, Property360 and 360PestControl wants to help our veterans get the home you deserve. If we conduct the WDO inspection we will treat minor water damaged wood and bill to closing if needed (some restrictions apply). We will work with your real estate agent and mortgage broker to help you close.
With a preapproval letter, you have at least made your VA offer competitive to FHA/conventional closings.
With a WDO inspection which includes treatment, you have eliminated the biggest and most common hurdle in seller repairs.
Property360 and 360PestControl can help you level the playing field. Now all you need is a great real estate agent and a great VA mortgage broker. Contact us today at (904) 503-9808 to request an inspection or for any additional questions around VA loans and how we can help.