Frank Sullivan, a sales agent for Caldwell Realty in North Kingstown, is a specialist in Veterans Benefits Administration home loans. A Vietnam veteran, he counsels buyers on how to move forward to take advantage of the VA mortgage program.
In a hot sellers’ market, the buyer with a VA mortgage may not be the top choice of sellers, who sometimes are getting cash offers for their properties, so Sullivan comes to them explaining the veteran’s story, as part of his negotiations. He spoke to the Providence Business News recently about the VA home loan program.
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PBN: Who qualifies for a VA mortgage?
SULLIVAN: The VA has strict rules for eligibility. That’s the first step in getting a VA mortgage, to sit with a veteran and look over their discharge papers, what they call the DD2-14, and see if they qualify. There are more than veterans who qualify. In Rhode Island, I did [paperwork for] a public health officer who qualified. There are some exceptions, but the bulk of the people are military veterans or they’re active military.
PBN: Does National Guard qualify?
SULLIVAN: It gets a little tricky. National Guard has to have fulfilled their full, six-year commitment. That’s where we run into problems sometimes. They tell the loan officer they are a veteran. The loan officer tells me they qualify for X amount of dollars but doesn’t actually get the certificate. They’ve lost their DD2-14. They have to find it from the military records center in St. Louis. [If they are shy of the six years], then they can’t get the loan. I had one guy, he had five years, and he could not get the loan.
PBN: How much of this business are you doing?
SULLIVAN: I’ll probably do over 20 of them in a year.
PBN: Why bother with a VA loan, what is the benefit?
SULLIVAN: The benefit is you don’t need a down payment. You can buy a house with zero down. There are very few of those programs left since 2008. The other benefit is they don’t have to pay mortgage insurance, [private mortgage insurance], and that’s become very expensive. They do have to pay a funding fee, it’s generally around 2.15 percent of the mortgage. But the VA lets them add that to the loan.
PBN: We have a lot of competition now in Rhode Island for first houses, with multiple bids becoming common. Does the seller have to choose the VA buyer?
SULLIVAN: No, that would be discriminatory. In fact, it can work against the veteran because he doesn’t have to have a down payment. I prepare them for that. I say, we may be at a disadvantage if there are three bids on this house and one of the people has a 20 percent down payment.
If you have no down payment, the seller may take the lower offer because the mortgage will be easier. The house has to appraise for the sales price as well, or the veteran can back out of the deal. You need someone that goes into this and has some negotiating skills. I go in not just selling my bid but selling my buyer. Some people will say, I do like the idea of selling to a veteran. I always talk to them about where they were and what they did.
Mary MacDonald is a staff writer for the PBN. Contact her at macdonald@pbn.com.
