Article Credit: Inspection Support Network
Owning a home is a big dream for many people, but the homebuying process often deters potential homeowners from going through with a purchase. If you’re a veteran, look into securing a home loan through the U.S. Department of Veterans Affairs (VA). The VA makes purchasing a home easier and more accessible for veterans of all ages. However, there are a few critical parts of the process that can help you ensure you’re leveraging all the benefits available to you as a veteran. There are also important incentives to capitalize on so you can easily buy the home of your dreams.
But before you start browsing the ‘for sale’ section on your favorite real estate websites, it’s essential to know the ins and outs of the home buying process. You’ll need to know how to apply for a VA loan, which benefits you’re eligible for, and how to complete your real estate purchase. From state-specific veterans benefits to loan applications and having a home inspection done to ensure your new home is in good condition, this guide will give you the details that you need to make sure you’re saving money at all stages of the home buying process.
Curious about VA loans? Veterans Affairs loans are a fantastic option for military veterans who are trying to get into the real estate market. Still, in many cases, these loans are underutilized by veterans. Studies show that 24% of qualified homeowners don’t use their VA loan benefits.
Similar to a Federal Housing Administration (FHA) loan, a VA loan is backed by the federal government but issued by a private lender. VA loans offer many benefits, from easier qualifications to lower interest rates. VA loans are open to nearly all veterans — all you need to do is ask your lender.
Extra VA Resources!
CRAZY SH*T IN REAL ESTATE #322: JAMES HEASLET
Aired on: January 11, 2022
James Heaslet is the Chief Appraiser for the Department of Veterans Affairs episode is all about a piece of lesser-known information that Realtors® and Veterans should know.
The advantages of a VA loan start with lower interest rates and streamlined refinancing options, and the benefits continue for years after you purchase your home.
Saving for a down payment is arguably one of the largest barriers for those trying to get into the real estate market. With home prices rising disproportionately to income, saving for a down payment while paying regular expenses is more difficult than ever. VA loans allow veterans to purchase a home with no down payment, which significantly lowers some of the hurdles to home ownership.
A low credit score is one reason applicants are sometimes denied a mortgage. As anyone stuck in a bad credit cycle knows, it often takes good credit to be approved for the things that help you build good credit. By accepting lower credit scores, VA loans ease this requirement for veterans.
Up to 20 percent of a VA loan is backed by the federal government, so applicants are not required for private mortgage insurance approval. Home buying is a complicated process full of various approval levels and applications, so removing the PMI requirement is a big step toward making the process easier for veterans.
High interest rates contribute to the difficulties that some people run into when applying for home loans. VA loans don’t subject veterans to the same interest rates as most other loans, which provides a more forgiving loan repayment process.
There are often hurdles to refinancing, but with a VA loan, the hurdles are significantly lessened. Along the way, you might find that you want to refinance to consolidate debt or leverage your home’s equity. With a VA loan, it’ll be easier to make those changes to your loan than with a traditional mortgage.
The VA loan is a great option for most veterans, but it does not apply to every home purchase or situation. Here’s what you need to remember before you shop:
In 2022, the VA loan saw a significant change. While it’s still true that 2019 legislation essentially wiped out VA loan limits, there are still some limitations for certain circumstances. For veterans holding more than one VA mortgage at a time or those who have defaulted on a prior VA loan, or those with diminished entitlement, limits still apply.
Those limits increased substantially in 2022 as a result of skyrocketing home prices. VA loan limits for those in unique circumstances increased by 18.05% in 2022 to assist veterans in an increasingly competitive market.
Entitlements and loan costs are two important factors to keep track of as you enter into the home buying process because they could save you money down the road. Read on to learn more about entitlements and other loan costs.
Veterans who qualify for a VA loan have what’s known as a loan entitlement. This is the dollar amount that the VA promises to pay back to your lender if you default on your home loan.
An entitlement is not the same as a down payment. However, that entitlement can cover your down payment. For veterans buying their first home with the VA loan who have full entitlement, this typically means they do not have to pay a down payment since the VA promises to cover 25% of the loan amount if you default.
If you have full entitlement and are purchasing a second residence, there are limits to how much of the loan the VA will guarantee. To calculate how much entitlement you are qualified for, you’ll need to use your current entitlement amount and your intended home purchase price in some quick math.
To offset the cost of the VA loan to taxpayers, veterans are required to pay a one-time funding fee. The amount of this fee varies between 0.5 – 3.6% based on a variety of factors but is typically 2.3%.
There are also a few other small one-time loan costs depending on the military position the veteran held. This includes
When you shop around for a home loan, you’ll find a variety of requirements that you need to meet before you can be approved for a loan. These requirements are in place to ensure that you’re eligible for certain benefits, such as those available through VA loans.
COE documents, also known as Certificate of Eligibility documents, are important as these documents verify your military services and approve your suitability for a VA loan. You can access your COE through the mail or online.
There are different requirements that you have to meet depending on your military status or the number of years you served as an active member of the military. For the most part, all of the requirements are similar with very minor differences. Familiarize yourself with the details of your unique situation so you can give all the information that a VA loan application requires.
One of the reasons that VA loans aren’t utilized as much as they could be is because the parties involved in the purchase of a home aren’t aware that this wonderful option exists. It’s a good idea to find a real estate agent who will make sure you’re leveraging all the benefits available to you.
Communicating with your lender about your veteran status and inquiring about different programs that you’re eligible for is a key component in making sure you have all of your benefits available to you. Make sure your lending agent knows the details of your veteran status and is aware that there are special avenues open to you.
Many first-time homebuyers get excited when their offer is accepted, and they start buying pricey items like home appliances, electronics, and home decor. It’s important to keep a cool head and finalize the home buying process before you start spending on renovations or other purchases.
While veterans have some great financial advantages available, there are still some expenses you have to take into account. Be prepared to spend money on home inspections and appraisals when they come your way. Taking the time to get familiar with the upfront costs of homebuying sets you up for success.
A VA loan is one of the best ways for veterans to leverage their benefits. From getting into the real estate market and making home buying more accessible to relieving the financial burden of the conventional home loan process, these loans are an excellent resource that veterans won’t want to sleep on. Take advantage of the benefits available to you and capitalize on a VA loan today.
Moving? Many retailers extend generous discounts to veterans. Check out these options before paying full price somewhere else.
StoreCategoryDiscountAllFormFurniture25%Bassett FurnitureFurniture30%BirchMattresses15%Brooklyn BeddingMattresses25%Crate & BarrelHome Goods10%Dania FurnitureFurniture15%Dromma BedMattresses10%GelProMattresses25%Hardscape DepotHome Improvement10%HelixMattresses15%iRobotHome Goods15%John DeereHome Improvement10%Latexite Blacktop DrivewayHome Improvement10%Leesa SleepMattresses15%Love SacFurniture5%Lowe’sHome Improvement10%McCoy’s Building SupplyHome Improvement10%Northern Tool + EquipmentHome Improvement10%SCANDISFurnitureFree deliverySherwin-WilliamsHome Improvement15%Tactical WallsHome Improvement7%ToolbarnHome Improvement5%WellnessMatsFurniture25%West ElmFurniture15%Williams SonomaHome Goods15%WORX ToolsHome Improvement10%
For those in need, there are funding options to offset the cost of utilities and some other monthly bills. Check out these sources:
All home loans will require the applicant to be approved for homeowner’s insurance, and a VA loan is no exception. Aside from being a requirement, home insurance also helps protect you against large costs from damages that could happen to your home from a break-in, vandalism, or accidental damage.
Homeowner’s insurance carries many benefits for the homeowner, not to mention it’s a requirement for a successful VA loan application. For the best rates, look for home insurance through USAA, which caters specifically to military personnel, veterans, and their families.
Also ask about any ways you can reduce your monthly bill. For example, you can bundle up your homeowner’s insurance with your auto insurance, increase your deductible, or add a smart home security system for improved protection against break-ins and burglary. Improvements such as reinforcing your roof, installing storm shutters, and updating your plumbing could lead to an insurance discount.
For veterans with disabilities, other assistance is available to offset housing costs and pay for home modifications
By the way — if you have any buying or selling questions as a Veteran, you can call on this girl! www.leighsells.com.
And if your association or brokerage needs a speaker, DM me!
~ Leigh Brown
REALTOR®. Author. Coach. Keynote speaker. Leigh Brown is laser-focused on inspiring people to be better, strive for more, and to take the reins and lead!
Learn more about LEIGH BROWN at www.leighbrown.com
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