Why comparing VA home loans to other options might soon get easier

Staff Sgt. Teresa Cleveland
·3 min read

A new congressional proposal would require federal officials to better explain the costs and advantages of Veterans Affairs home loans in an effort to dispel myths about the homebuying benefit.

The bipartisan bill, dubbed the Veterans Affairs Loan Informed Disclosure Act (or VALID Act), would require the veterans be provided a side-by-side comparison of conventional home loans, Federal Housing Administration offerings and the VA home loan program as part of pre-purchase disclosure forms.

Supporters say the move would more directly show when VA loans may benefit would-be home buyers and encourage more usage of the program.

Bill sponsor Rep. Guy Reschenthaler, R-Pennsylvania, said in a statement, “As a Navy veteran who used a VA home loan, I know how difficult the process can be. It’s not surprising that only 10 to 15% of veterans report successfully using this significant benefit.”

“Modifying the Informed Consumer Choice Disclosure requirement to include VA home loans will improve transparency and help more veterans achieve the American Dream.”

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The VA home loan program has come under increased scrutiny in recent months as housing prices have risen sharply.

In fiscal 2021, department officials guaranteed more than 1.44 million loans valued at roughly $447 billion, a record high and up 15% from the previous year.

However, outside advocates have testified before the House Veterans’ Affairs Committee that long wait times for processing the veterans loans coupled with other paperwork requirements have forced some veterans to drop the benefit in favor of quicker — but not always better — loan options.

Veterans using the benefit can secure a loan without a down payment or and with lower interest rates than conventional loans. But it does require special qualifying and appraisal rules, which can slow down completion of a home purchase.

For example, VA officials have said the average wait time for a home appraisal through a VA loan is about 15 business days. For non-VA loans, that process is usually around two days.

In March, officials from the the National Association of Realtors in partnership with VA released a video series for home buyers, sellers and real estate agents designed to dispel myths around the program and explain how the process differs from conventional loans.

The new legislation would build on that, showing the exact costs associated with the loans in order to “ensure veterans engaged in the homebuying process have a complete understanding of the financing options available to them.”

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The information would be included in the Informed Consumer Choice Disclosure Notice mandated for home sales by the Department of Housing and Urban Development.

“Our nation owes a debt of gratitude to those who put their lives on the line to defend our freedom,” co-sponsor Rep. Derek Kilmer, D-Washington, said in a statement. “That means that every veteran should have a home. And it means veterans should have an easier time finding the benefits that are available to them.”

The legislation has support from the National Association of Realtors and the Veterans Association of Real Estate Professionals.

Although largely non-controversial, the bill may face a difficult path to becoming law because of the short amount of time left on this year’s congressional schedule.

Lawmakers are on August recess and are expected to return to Capitol Hill in September for a few weeks before leaving again for a monthlong break before the midterm elections in November.