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The 5 Biggest Mistakes Veteran and Military Home Buyers Make

August 23, 2019

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Having a place to call your own—whether you’re going to be there for four years or forever—is an essential part of the American dream. The U.S. Department of Veterans Affairs offers plenty of great programs to help those who have served in the military get a home loan, but the process isn’t foolproof. First-time home buyers aren’t the only ones who make buying mistakes. Even people buying their second home, or their 10th, can be thrown off course when buying a new home and dealing with lenders.

You can avoid your own buyer’s tale of woe (or headbanging frustration) by avoiding those mistakes before you start your home search. We asked VA-savvy real estate agents to tell us which missteps they see the most—and how you can avoid them when you apply for and get a VA loan.

Mistake No. 1: Not using a VA-savvy real estate agent

If you’re getting a VA loan, make sure you work with a real estate agent who understands the VA home loan 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 home loan system, the VA appraisal process, and what that all really looks like.”

When you’re buying through the Veterans Affairs department, you’ll need to find a home that meets VA home loan property requirements. A VA loan program appraiser will have specific criteria (e.g., fixer-uppers, and even some newer homes, won’t qualify). An agent experienced with home loans for veterans will also know about VA loan limits, the debt-to-income ratio lenders will expect you to have to qualify for a home loan, and other essential information.

Save yourself the headache of making an offer on a house that may not get approved, or for which you may not qualify for a VA loan, and work with a VA-experienced real estate agent from the start. Ask another veteran for a referral, or get help from Veterans United Realty to find the right real estate agent.

Mistake No. 2: Not communicating with your lender

Veterans have access to arguably the most powerful home mortgage option on the market, but about 33% of home-buying veterans don’t know they have a home mortgage benefit, according to the VA.

When you first meet with your lender, be sure to discuss your service member status so you can be informed about all of the potential advantages for veterans.

One of the biggest benefits you’ll get with a VA loan is the ability to buy with a 0% down payment (yes, we’re totally serious). Not having to make a down payment can make it possible for veterans  to buy a first home, often years sooner than if they had to save up for a down payment first.

VA loans also come with low-interest-rate mortgages, don’t require mortgage insurance, and have more forgiving credit eligibility 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.”

Pretty much everything will get easier as soon as your lender knows your eligibility for veteran status, so speak up!

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

While you’ll have a ton of financial advantages with your VA loan, you will have some borrower 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 closing costs and fees necessary for buying a home,” Fraser says.

When you’re buying a home, even if you have little or no down payment, 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 (say, 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. You can even refinance a VA loan if you are an active-duty service member. You may want to refinance if you have a non-VA loan, to increase your loan amount and tap into your home equity, or if you can get a better interest rate with a new VA loan.

Mistake No. 5: Making other big purchases before closing

Once home buyers find a home and their offer is accepted, they can be excited about moving in and making it theirs. 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 until you’re really a homeowner, even if your lender has approved your mortgage loan.

It’s easier to get a VA loan than a conventional, non-VA loan, but you still must meet lender requirements.

“Opening a line of credit or making a big purchase after mortgage 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.


Watch: Housing Chief Gives Update on Growth of VA Home Loans

The post The 5 Biggest Mistakes Veteran and Military Home Buyers Make appeared first on Real Estate News & Insights |®.

How to Buy a House for $10,000 Upfront (or Less!)

October 27, 2018

Pssst … wanna know how to buy a house for just $10,000 upfront, max? No, this isn’t a scam, or a ploy to lure you into purchasing some rickety shack in the middle of nowhere. We’re talking about a nice house in a nice neighborhood—for no more than a hundred Benjamins.

We get why you’re skeptical, given the high price of homes today. According to data, America’s median home price rose 7% last year to $295,000. And since many assume a 20% down payment is required to buy a home, that would amount to you coughing up $59,000 before you ever move in! No wonder many of us expect to spend years scrimping and saving to be able to make our home-buying dreams come true.

But here’s a reality check: The upfront costs of buying a home have a lot more wiggle room than you might think.

It largely comes down to trimming two variables: your down payment and closing costs. Here’s the scoop on how to whittle these down to size so all you need is $10,000—or even less—to buy a home of your own.

How to buy a home for $10,000: Tips to trim your down payment

Here’s the secret, in a nutshell: Yes, a 20% down payment is traditionally recommended for conventional loans since it allows you to avoid paying an extra monthly fee called private mortgage insurance (PMI). But that doesn’t mean 20% is necessary.

As such, the first key to buying a home for $10,000 or less is to take out a mortgage that requires little money down, or no down payment at all. There are four options available.

Veterans Affairs loans

If you or your spouse serve or served in the military, you may qualify for a Veterans Affairs (VA) loan. Under this program, the VA guarantees the loan, reducing the risk to the lender. You can finance up to 100% of the house’s cost, so you won’t have to come up with any money for a down payment. Just keep in mind that there are minimum requirements for your income and credit score that vary by lender, so it’s a good idea to shop around for a VA loan to ensure you get the best deal.

There are some fees associated with VA loans, but they can be rolled into the total loan amount that you make payments toward monthly.

According to Jennifer Beeston, vice president of mortgage lending with, there are many myths about VA loans that cause people to avoid them.

“Many veterans do not use their VA loans because they hear they are too difficult,” she said. “But honestly, VA loans are very easy and offer a tremendous benefit to the borrower.”

USDA loans

The U.S. Department of Agriculture offers loans to Americans with low to moderate incomes who want to buy a home in a rural area. Like with VA loans, you can borrow up to 100% of the home’s cost, eliminating the need for a down payment. USDA loans do have some fees, but you can roll them into the mortgage.

“USDA loans are fantastic loans that many people do not know about, but should,” Beeston says.

You’ll need to pay ongoing fees for mortgage insurance, he notes, but it’s less than an FHA or conventional mortgage.

FHA loans

If you don’t qualify for VA or USDA loans, another option to consider is a Federal Housing Administration (FHA) loan. With an FHA loan, you still have to come up with a down payment, but it’s only 3.5% of the home’s price.

For the median $295,000 home, that would mean a down payment of $10,325. On a $150,000 home, you’d only have to put down $5,250. Depending on where you live, that could be enough to buy an excellent house in a great area.

The one downside? Because you’re making a small down payment, you will need to pay mortgage insurance (PMI). But you can roll that cost into your total mortgage.

Credit union loans

Some credit unions offer mortgages that require only a small down payment, or no payment at all. It’s wise to check out local credit unions in your area to see what kind of home loans they can offer you.

How to lower your home closing costs

Even if you get a home loan that covers 100% of the home’s cost, you typically need to come up with thousands of dollars to cover closing costs. Those are the fees paid to third parties who facilitate the sale of a home. They include the loan origination fee, credit report fee, title search fee, and more.

While closing costs vary widely, they typically total 2% to 7% of the home’s purchase price. So on a $295,000 home, your closing costs would amount to about $5,900 to $20,650.

However, that doesn’t necessarily mean you have to raise that money yourself. There are two other ways to cover closing costs.

Ask the seller to cover it

One of the best ways to pay for closing costs is to negotiate with the home’s seller to cover some or all of the costs. Depending on the housing market in your area, sellers may be anxious to close a deal quickly and will be more motivated to pay for your closing costs just to get the sale over with. If you show a willingness to close quickly, you will have more bargaining power.

“If you have zero money saved, I have seen Realtors ask the seller to cover 3% of closing costs,” said Beeston. “If the house is under $150,000, you may need to ask for more than 3%, but that’s something the Realtor can negotiate.”

Look for closing-cost assistance programs

A number of states offer first-time home buyer programs and closing-cost assistance grants. In return for a commitment of living in your new home for at least a few years, you can get a grant to help with closing costs. To find programs near you, check out your state housing authority.

Bottom line? When it comes to buying a home, we typically expect to spend years scraping up enough money to cover a down payment and closing costs—but that might not be necessary. There are plenty of ways to downsize not only your down payment, but those pesky closing costs to put homeownership within reach for as little as $10,000, or even less.

Want more advice on buying a home? Check out our first-time home buying guide for more, or talk to a lender to learn how big a mortgage you can afford.

The post How to Buy a House for $10,000 Upfront (or Less!) appeared first on Real Estate News & Insights |®.