VA mortgage headaches

[newyorker]

I'm hoping this is the best forum for this question (tho it doesn't related to real estate in Sowal)--I know there are a number of you on this board who know real estate well.

I feel like I'm in the midst of real estate hell.
I'm moving to Memphis--and that end is going well. I've had an offer on my NY house since April 28th--the buyers are an active military guy from West Point who wants to finance his purchase with a VA loan at 100% . It turns out that real estate transactions in NY are far more complicated than anywhere else I've lived (lawyers are heavily involved--we have a lawyer, the buyers have a lawyer, the bank has one too--closings are crowded affairs!).
The inspection issues were a huge headache, but we got those worked out. Now it turns out the buyers need to "extend the mortgage contingency date" from May 26th to June 15th. My real estate person here has been less than helpful (think of Eoyore in Winnie the Pooh!)--and my lawyer (actually paralegal--you don't really talk to the lawyer) seemed unphased. Thanks to my Memphis broker and bankers, I think I have some idea about how VA loans work, but I'd like to hear from any of you who might have dealt with VA loans.--I need to have some idea before Wed (when I have to either give the go-ahead or pull the plug on the request for the extension.) Supposedly, the buyers are financially ok (getting this in writing in my lawyer's folder has been an effort). More troubling is that "closing dates" in NY are "flexible"!!!
I really need to have this deal close by the end of June so that my Memphis house can close as well. What experience have any of you had with VA mortgages? (My NY house is in a desireable upscale school district in upstate NY--but houses in our entire area are not as expensive as some parts of the country--hence the ability to be able to conform to VA funding guidelines). I need either reassurance or not--our buyer is supposedly dealing with a "gov't bank"--does all this mean that the request is quite legitimate since the delays are gov't bureaucracy???

My one piece of advice after all this is: be very careful EVER buying property in upstate NY--I am totally unimpressed with the real estate community here and their lack of professionalism. Thank god for my Memphis contacts --

Newyorker (and not for long!!!!)

 

[Miss Kitty]

I don't know nothin' about NY real estate, but GOOD LUCK!!!! What stress!

 

[TooFarTampa]

NY, I don't really have a lot of experience with VA loans -- we got one for our first home purchase 10 years ago so a lot may have changed. I do remember that the process took about 60 days to get the thing closed, and the lender was VERY picky about inspection issues.

Also we were total novices. We'd read a couple of books and that was it. I remember being shocked over the last-minute nature of the paperwork and processing, despite the fact that we had been totally on the ball with everything from the start.

If you've had a contract since late April, an extension would give the buyers 45 days for that contingency, which doesn't seem too outrageous, given that VA loans take longer anyway and instant approval doesn't always mean anything. You can get approved and then something holds you up. I would say if you feel confident that these people have their finances together, give them the extension, but only after asking details about exactly where they are in the process. As you know many agents at this point are not interested in facilitating important conversations like that. Have you met them? Would you feel comfortable talking to them one on one?

If you decided to start over, you may just regret it, especially if your market is softening at all. Good luck -- these are stressful times indeed!

 

[Smiling JOe]

NewYorker, congratulations on getting a contract on your home in NY. To be blunt, I hate VA loans, and fortunately at the moment in this local market, we don't see them, due to the higher prices of homes. There is not a limit on a VA loan, but the most the govt will guarantee on them for homes over $144K is up to $60K or 25% of the loan amt, so most lenders observe a max loan amt ouf $240K. There are Federal rules regulating VA loans. Note that the loan cannot exceed tha amount stated in the Certificate of Reasonable Value issued by the DVA and based on the property value estimated by a VA appraiser. Around here during the last two years, it was difficult to get homes to appraise at the contracted price, because of the rapid growth rates. If the VA loans had been used, many would not have gone to close because of that.

The VA's requirements are not nearly as bad as FHA loans, which don't allow the buyer to pay certain closing costs.

To learn more about the VA loans, you can go to www.homeloans.va.gov

I hope the transactions and transition go smoothly for you!

sj

 

[SHELLY]

If you decided to start over, you may just regret it, especially if your market is softening at all. Good luck -- these are stressful times indeed!

Ditto on TFT's point.

You've got a fish on the line, do you want to shake it off and start again? Maybe you do...maybe you don't.

Do you want to go back to square one and have Eeyore schlepping lookie-loo's through your home? Maybe you do...maybe you don't.

IMO the VA is doing the right thing by protecting the lender and the new homeowner--I know Realtors have become used to the "12-hour 1-Year Option ARM Loan approval from Quik-E-Loan and Tattoo Parlor" being the norm for past couple of years, and if you can be absolutely sure you can pick one of these buyers off the street in the next 2 weeks jump at the chance.

But the word from the World of Real Estate as of late has been--"things are reverting back to normal" and if by that they mean no more investulators, unaffordability, fewer real buyers, massive inventory, higher interest rates, and more prudent loan choices (on the part of the lenders and the lendees) that's where we're at right now.

The real question isn't "can I afford to wait out the VA" it's "can I afford not to."

I sincerely wish you both luck.

 

[newyorker]

thanks to all of you...

I know the market is softening--but upstate NY is actually a little behind the rest of the country, and the word here this spring is that the prices are remaining the same but it takes longer to sell. Hence, Shelley's caution is certainly well taken.

To be frank, we have a way of closing on the Memphis house w/o the closing of our NY house, but it is expensive and a pain, and I'd rather not "go there" if I don't have to. What is enormously frustrating, as TFT notes, is the "last minute rush rush" nature of these transactions (from the lawyers, and not the realtors--who are surprisingly uninvolved in making anything happen--that's what is so surprising--usually the realtors I've dealt with elsewhere work their butts off to ensure that the sale goes through and everyone is as happy as can be expected in these circumstances).

Given everyone's caution about the market, I am certainly concerned about letting this buyer go and beginning over again--and leaving an empty house and pool in mid-summer. The hope is that my lawyer (paralegal) can actually contact the bank and get some word that these folks are "low risk". I am told they "really want" my house.

The only protection I've gotten is one I myself built in to the process--the buyers demanded after the structural inspection that they must have legal egress from my finished basement--I agreed (and in NY this means money "given back" at closing)--but I agreed "subject to the closing date stipulated in the contract." The buyers agreed, so perhaps that will speed the "gov't bank" and everyone else to observe the closing date!!

SJ--you have no idea how grateful I am to the folks you referred me to in Memphis!!!

 

[Smiling JOe]

SJ--you have no idea how grateful I am to the folks you referred me to in Memphis!!!

My pleasure. I knew Camille could find the right home for you. ;-)

 

[Bob]

New Yorker, Do take the time to find out about the borrowers in any way you can. You are facing a potential pitfall here of conservative Va underwriting or, a marginally qualified buyer. The buyer should have had a simultaneous conventional 80/20 backup financing at the ready should VA problems occur.