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Top Tips & Mistakes To Avoid For Military Buyers

Why Veterans Need Military-Friendly Real Estate Agents
Buying a home will likely be one of the biggest purchases of your life. Having a knowledgeable real estate agent to walk you through the process is imperative for a smooth transaction. This is especially true if you’re purchasing with a VA home loan.

VA mortgages come with a host of benefits, including no down payment, low interest rates, and no private mortgage insurance. Along with these benefits come some unique loan requirements. Here are three key reasons why using a military-friendly real estate agent benefits VA home buyers.

1. They understand the unique needs of VA home buyers
Active-duty service members relocate frequently. When receiving permanent change of station (PCS) orders, service members receive 10 days of leave to scope out the new duty station and complete a home search. Choosing an agent who understands this short time frame and can dedicate the time necessary to find a home during this compressed period of time is essential.

Due to frequent relocations, it’s also important for agents to understand the importance of strong resale value. Agents who work with active-duty service members understand they’ll need to identify a home that not only fits the service member’s current needs. The agent also needs to make sure the home has the potential for a quick and profitable resale if the service member receives PCS orders again.

2. They’re passionate about serving those who’ve served
Agents who identify as military-friendly frequently have a passion for serving those who’ve served. Some have served themselves, others have close ties to someone who has, and others simply have a desire to give back to those who’ve given so much for our country.

They’re also passionate about educating veterans and service members about VA home loan benefits. Many of these agents now ask every buyer “Did You Serve?” so they can identify buyers who may be eligible for a VA loan.

3. They understand the unique requirements of the VA loan

The Department of Veterans Affairs has created a few unique requirements for VA loans, to ensure buyers purchase homes that are a solid investment. The VA established a set of minimum property requirements (MPRs) to ensure all homes purchased by veterans and service members are safe, sanitary, and structurally sound.

VA appraisers are tasked with the responsibility of outlining any features not meeting the MPRs, and any issues will likely have to be fixed prior to closing. An agent who’s worked with VA buyers and understands MPRs is a great asset when doing a walk-through on a potential property—he or she can point out possible MPR issues before going under contract.

Questions Military buyers should ask the lender

Question No. 1: Do you have VA loan expertise?

VA loans aren’t the right fit for every military buyer, but they’re helping scores of veterans get a foothold in the housing market. These flexible loans come with unbeatable benefits like $0 down payment, no mortgage insurance, forgiving credit guidelines, and the lowest average interest rates on the market.

They’re also a more specialized mortgage product, meaning some lenders are more familiar with VA loans than others. VA loans have guidelines and requirements that look a bit different from other loan types.
Finding lending partners who truly know VA loans can help ensure you get the most from this historic and hard-earned home loan benefit.

Question No. 2: Can you connect me to veteran-friendly agents?

Real estate agents are the boots on the ground for many military buyers. They can play an essential role in guiding veterans through the home-buying process. Working with agents who understand the unique needs of veterans and military buyers is key.

Many would-be buyers start with lenders and work toward loan pre-approval before connecting with a real estate agent. Talk with loan officers about their relationship with military-savvy real estate agents. This can be especially critical for active-duty military preparing for a Permanent Change of Station (PCS) move.

Question No. 3: What do your veteran and military customers say?
Consumers increasingly rely on online reviews to make purchasing decisions. So why wouldn’t you consider them for what’s often the biggest purchase of your life? Source Realtor.com

 

The 5 Biggest Mistakes Veteran and Military Home Buyers Make

Mistake No.1: Not getting a Realtor who knows VA loans

If you’re getting a VA loan, make sure you work with a Realtor who understands the process.
“I see a lot of people go with an agent who doesn’t understand the VA system,” says Katie Fraser, a Realtor with Trident Realty Group Northwest in Seattle. “The VA won’t underwrite [just] any house. It is a huge, huge, huge deal to use an agent who understands the VA system, the VA appraisal process, and what that all really looks like.”
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 qualify. Save yourself the headache of making an offer on a house that may not get approved, and work with a VA-experienced Realtor from the start.

Ask another vet for a referral, or get help from Veterans United Realty to find the right pro.

Mistake No. 2: Not communicating with your lender

Veterans have access to arguably the most powerful mortgage option on the market, but about one in three home-buying veterans don’t know they have a home loan benefit, according to 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% down (yes, we’re totally serious). VA loans also come with low-interest rates, don’t require mortgage insurance, and have more forgiving credit requirements.

“Veterans should ask their lender if they offer any incentives for veterans,” adds Alissa Gerke, broker and owner of Select Realty Group in Columbia, MO. “I’ve seen lenders waive appraisal fees, offer a waiver of origination fee if the veteran has a certain credit score, or other lender credits.”

That’s right—pretty much everything will get easier as soon as your lender knows your military status, so speak up!

Mistake No. 3: Forgetting about all the home-buying costs

While you’ll have a ton of financial advantages with your VA loan, you will have some costs to deal with.
“Probably the biggest mistake I see is active-duty members coming into the home-buying process and not knowing there are other costs and fees necessary for buying a home,” Fraser says.
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. 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.

Mistake No. 4: Not thinking of your home as an investment

Maybe you think there’s no sense in buying if there’s a chance you might 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 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.

“[My clients and I] often go out and look for their first rental home, not just a home for their family,” Fraser says. “With so many in transition, they’re able to purchase a home and it becomes an investment property for them when they go on to their next duty station or they move.”

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 just 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 a new home.

Mistake No. 5: Making other big purchases before closing

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, and you’re looking into financing a new living room set you love. But don’t do that yet.

“Opening a line of credit or making a big purchase after loan approval is a common mistake,” Gerke says. “This can oftentimes change the veteran’s credit score and make them ineligible for the loan.”
Wait until after closing to make any other financial moves, just to be on the safe side and to keep your loan on track. Source Realtor.com


Yes, You Can Use Your VA Loan Benefit Again


Entitlement: What It Is and How It’s Used

Veterans and active military members who meet the program’s service requirements have what’s known as VA loan entitlement. This is a specific dollar amount the VA promises to repay to a lender if the veteran defaults on the loan.

Qualified borrowers have two levels of entitlement, a portion of which is applied whenever a veteran purchase a home. Depending on how much is left over, it’s actually possible to retain and rent out that first home and purchase again with no down payment. One of the most common examples is when an active service member purchases a home at one duty station and then has to PCS to another.

Entitlement is a concept that even confuses people in the mortgage industry. Check out this post from VA Loans Insider for a more in-depth look.
The bottom line is that when it comes to “moving up” the homebuying ladder, current VA homeowners may actually be able to capitalize without having to sell their current residence.

Selling and Starting Fresh

Veterans looking to move up are more commonly going to sell their current home rather than try to keep it. Generally, in these cases buyers don’t have to worry about how much entitlement they have left. That’s because once the house is sold and the loan is repaid veterans can seek to get their entitlement amount fully restored.
For example, let’s say you purchase a home for $144,000. Since the VA insures a quarter of the loan, you’ve likely got $36,000 of your entitlement tied up in the property. Once you sell that property and the lender is made whole, you can file paperwork to get back the $36,000 used on that first purchase. At that point, veterans looking to “move up” can do so with their full entitlement intact.

While deciding to rent or sell is just the beginning of the process in securing a second VA home loan, it’s perhaps one of the most vital steps in “moving up.” Without the stress of saving up for a hefty down payment, the VA home loan gives military members and veterans an advantage in an otherwise uncertain housing market.

Lifelong Benefit

Your VA home loan benefits are not a one-shot deal, whether you’re a Vietnam veteran, an Air Force reservist or currently serving our country in Afghanistan or other points abroad. The VA Loan Guaranty program was created to make homeownership more accessible to our service members and their families. Since 1944, the Department of Veterans Affairs has backed more than 18 million mortgages. This is a benefit that binds generations.
It’s also a benefit that continues throughout your life. Anyone who tells you this is a one-and-done program doesn’t understand the basic foundations of the VA home loan.

KNOW YOUR PURCHASING POWER

Find Out if You’re Eligible
The home loan specialists at Veterans United can help you determine your remaining entitlement
Restoring Entitlement

VA borrowers who sell their home and pay off the mortgage can seek to have their full entitlement restored. You can learn about Restoration of Entitlement in our VA Loans Insider blog. When your full entitlement is back on the books, you’ll have the same purchasing power you did on that first home, depending, of course, on your overall financial health. Source Veterans United