Tips for Buying a Home That Every Veteran Should Know
Buying a house is an exciting and emotional experience for most people. This is especially true for Veterans who have likely spent years moving from base to base and are searching for a place to call home.
While the home-buying process might be intimidating, there are numerous services available to make it easier and more economical for military personnel. If you’re a Veteran or active service member looking for a new home, keep these seven important house buying tips in mind.
RECOGNIZE THE VA HOME LOAN
Most Veterans are qualified for a VA home loan, which is backed by the US Department of Veterans Affairs and provided by private lenders. VA loans, which need no money down, are a competitive and reasonable solution for veterans looking to settle down. Veteran first-time homebuyers who don’t have enough money for a down payment can benefit from VA loans.
Credit requirements are much less stringent than with typical mortgages, which is a plus for those without a significant credit history. Furthermore, VA loans do not require private mortgage insurance (PMI), which is a common form of insurance for borrowers who cannot afford a 20% down payment.
With VA loans, funding costs are essential, which are not usually included in traditional mortgages. The fees, on the other hand, are beneficial because they go directly to the Department of Veterans Affairs to cover program expenditures. The funding fee for the first use in 2020 will be 2.3 percent of the total loan amount, and 3.6 percent for subsequent uses. This fee can be paid in full or added to the loan. Make sure you’re qualified for a VA loan before moving on.
Understanding the fundamentals of a VA home loan and how to make the most of your military advantages are only the beginning of the mortgage process. Speak with a knowledgeable mortgage lender about what works best for you to better understand how to maximize the usage of your benefits.
PAY ATTENTION TO YOUR CREDIT
Although VA loans have fewer credit requirements than traditional mortgages, Veterans should not overlook one of the most essential home buying tips. Homebuyers must have some form of credit history with more good than negative indicators. Check your credit score on a frequent basis to ensure that your present behaviors are benefiting instead of harming your credit.
RESEARCH OTHER FINANCIAL OPTIONS
There are a number of different home-buying grants and programs available to Veterans, including:
Dream Makers Program: This program offers subsidies for down payments and closing fees to qualifying Veterans and active duty service members. The Dream Makers grant is based on a two-to-one match of the homebuyer’s contribution to the purchase price.
Adapted Housing Grants: These incentives can assist Veterans with permanent and total service-connected disabilities in purchasing or constructing an accessible home. They can also be utilized to adapt an existing home to meet the needs of someone with a disability.
State and Local Programs: State and local programs: There are various state and municipal programs that provide housing subsidies to Veterans in their community. Once you’ve determined the exact location of your new home, you can search the VA’s National Resource Directory for additional area-specific housing assistance.
MAINTAIN YOUR EMPLOYMENT
Stability, job, and income indicate to the lender how much house you can buy and are essential factors for qualifying for any mortgage, even a VA loan. So, if at all possible, maintain your employment during the home-buying process. Leaving your steady career, even if you have another lined up, raises red signals for lenders of all kinds. This means that your income may not be in line with the conditions of your loan offer.
Even if you signed the paperwork, your loan is not guaranteed until the closing is completed. As a result, if you change jobs throughout the process, your loan eligibility may be revoked. This also applies to large purchases. Of course, you should continue to make critical purchases, but anything unnecessary and large that can wait should.
REMEMBER TO FACTOR IN CLOSING COSTS
One of the many advantages of a VA loan is the low cost of closing. While there are closing charges with the loan, the government does not allow Veterans to pay many of them. Escrow or settlement fees, processing, underwriting, and document fees are examples of non-allowable charges. In lieu of these closing expenses, the lender may demand a one percent origination fee, which means one percent of the loan amount is required instead.
So, what fees will be required? Veterans will be responsible for the cost of a credit report, appraisal, title insurance, recording fees, and a survey. Other ongoing expenses, such as hazard insurance, may be imposed on Veterans over the life of the loan.
Keep in mind that the types of fees and their amounts differ widely from state to state. Your lender should offer you a loan estimate that details the specific fees you’ll be required to pay at closing. These costs can also be negotiated, as the seller may pay for a portion of them.
EMPLOY THE SERVICES OF A QUALIFIED REAL ESTATE AGENT
Choose a realtor that has experience working with Veterans if you intend to take advantage of Veteran home buying programs. Because the differences between VA loans and other mortgage alternatives can be significant, one of the best house buying advice for Veterans is to deal with a professional who completely knows the buying process.
Consider browsing online directories for Veteran-friendly agents or speaking with other Veterans who have successfully purchased homes in your area. If you believe your agent is unable to properly guide you through the procedure, don’t be afraid to change agents at any moment.
Buying a home as a Veteran is a big decision, especially for those who have recently left the military. The appropriate information and preparation, on the other hand, can make the process substantially easier. These seven Veteran house buying recommendations will help make the process of homeownership as exciting and simple as possible, from researching all of your lending options to understanding closing costs.