Having a place to call your own — whether you’re going to be there for a short time or forever — is the American dream. For our men and women who have served in the armed forces, that dream can become a reality because of programs designed just for them.
The U.S. Department of Veterans Affairs offers plenty of great programs to help those who have served, but the process isn’t perfect. People can (and do) make mistakes while purchasing a home.
You can avoid the mistakes made by others before you even begin your home search. Here’s how:
1. Hire a VA-savvy Realtor.
If you’re getting a VA loan, make sure you work with a Realtor who fully understands the process. When you’re buying through the VA, you’ll need to find a home that meets VA property requirements. A VA appraiser will have specific criteria; for instance, fixer-uppers (and even some newer homes) won’t meet the standards. Save yourself the hassle of making an offer on a house that may not get approved by working with a VA-experienced Realtor from the start. Ask another vet for a referral, or contact a business such as USAA or Navy Federal Credit Union for assistance.
2. Be open with your lender.
Veterans have access to arguably the most powerful mortgage option on the market, but about one-third of home-buying veterans don’t know they have a home loan benefit, according to information from the VA. When you first meet with your lender, be sure to discuss your military status so you can be informed about all the potential advantages.
One of the biggest benefits you’ll get with a VA loan is the ability to buy with 0 percent down (yes, zero). VA loans also come with low-interest rates, don’t require mortgage insurance (PMI) and have more forgiving credit requirements.
Not to mention that some lenders will even waive appraisal fees or offer other incentives for veterans. So, don’t forget to speak up about your military status. It can only hurt you if you don’t.
3. Don’t forget that there are some costs.
While you’ll have a ton of financial advantages with your VA loan that other homebuyers won’t, you will have some costs to deal with.
When you’re buying a home, you’ll likely have to plunk down a bit of cash for things like a home appraisal and inspection, title insurance and credit reports. It might not cost much in the large scheme of things, but it’ll help speed things along if you come prepared knowing what you’ll have to shell out for. Although, veterans who receive a disability rating will be exempt from some of the fees.
4. Think of your home as an investment.
Maybe you think there’s no sense in buying since there’s a chance you will be relocated in the next few years. But that doesn’t mean you shouldn’t buy; in fact, that home could end up being a smart investment.
By searching in high-demand areas close to a military installation or in a great school district, or choosing a popular home style and size (like 1,500 to 2,000 square feet), you’ll give yourself a better chance at resale if you need to move later. Or, you can hang on to it and rent it out.
Don’t like the idea of becoming a landlord? A VA loan is assumable (meaning you can transfer the loan and the property to another vet), or you can sell the home to a nonmilitary buyer. And don’t forget: You can use your VA home loan benefits again and again, so you can own a rental property AND still purchase a new home.
Don’t make large purchases until the process is over.
Once you’ve found a home and your offer is accepted, you’ll probably be excited to just move in already and make it yours. Maybe you have an eye on a new big-screen TV or you suddenly need a new car, and you’re looking into financing a new living room set you love. Don’t do that yet.
Wait until after closing to make any other financial moves, just to be on the safe side and to keep your loan on track.
What mistakes did you avoid or encounter when buying your home?