Did you know a seller can pay off a buyer’s debts to qualify them for the loan?February 05, 2019

That was a click-bait headline. Before you stop reading – it is true, for VA loans. Our current market has softened a bit, which is putting sellers and buyers in a unique situation. We have quite a few sellers who have identified their next home, are in contract to purchase it….subject to selling their home. This is where things have gotten tricky for more than a few in our local Reno market.

Don’t discount a VA buyer.

On VA financing, veterans are eligible to make zero down payment. And most know, the seller can even pay their closing costs for them. What many may not know, is that the seller can also buy off a veteran’s debts in order for him to qualify. Why would a seller want to do this? Well, there are a number of reasons that go beyond thanking our veterans for their service.

Sometimes Sellers need to move…

If the home has been on the market for about 30 days, it’s worth finding out what the seller’s circumstances are. Even if the property is priced just slightly higher than your Veteran buyer’s price point. If the seller is motivated, they may be interested in crediting towards the buyer’s closing costs or debts. On all other loan programs, the borrower must have their own down payment funds. Remember though, on a VA loan the borrower doesn’t have a down payment requirement. On all other loan programs, seller credits can only be applied towards closing costs. On a VA loan, the seller credit can be applied towards paying off the borrower’s auto loan which may have been prohibiting him from qualifying for this home.

If a seller is looking at a price reduction of $25k or a veteran’s offer which includes a $10k credit towards their closing costs or debts, the seller’s bottom line is looking better with the veteran.

The possibilities are endless!

 

This likely isn’t going to push your average VA borrower up $50k on their price point. It’s still worth investigating. If you are VA approved (or need to find out if you are), let’s review their file and discuss some strategies we might be able to use as negotiating tools.