In case you missed the announcement Monday, Military Media will focus more on finance and financial advice in the veteran space. There will be more information for those seeking basic knowledge about how to develop a budget, and navigate various investment opportunities. As always, appreciate your reading!

THE BIG STORY

Finding a Home That the VA Home Loan Will Cover

The VA Home Loan is a great benefit for veterans, but it isn’t all-powerful. Here are some things to look out for while house shopping.

The VA Home Loan, like the Post-9/11 GI Bill, is one of the most substantial benefits for which eligible veterans qualify. While it isn’t a free home (in the way the Post-9/11 GI Bill is a free education), the Home Loan makes home ownership far more accessible under most circumstances. Benefits include no down payment, competitive interest rates (usually the lowest available), controlled closing costs, no prepayment penalties, and no mortgage insurance.

What steps can a qualified veteran take to make the most efficient use of their loan while shopping for houses?

DO’s

Ask for real estate agents specializing in VA Home Loans. Most Real Estate companies and office branches will have at least agent who has experience with VA Home Loans. They’ll save you, the veteran, trouble, by guiding you to properties that will meet with VA approval, and keep you away from iffy properties that may not meet muster.

Read whatever version of the “VA Home Loan Guaranty Buyer’s Guide” is most up to date, published by the VA. It will walk you through all the various benefits, rules, and regulations, which change from year to year as technology and markets evolve.

Follow best practices for home buyers. The VA Home Loan is a benefit to facilitate purchasing a home, and while it offers many compelling advantages, the basic fundamentals that apply to others also apply to the veteran home buyer. The Department of Housing and Urban Development or HUD has a useful set of resources for new or first time home buyers. Chief among them: make sure the house’s fundamentals are solid (cracks in the foundation, leaks in the roof, location near frequent natural disasters, access to sewage or septic tanks, etc.). A corollary to this is follow best practices for buying anything — don’t go to a grocery store while hungry, or without a coherent plan. Know what you want (access to trails and parks, a back yard, not on a main road) and what you need (at least three bedrooms and two full bathrooms for a family of four, for example). If possible talk with potential neighbors to see what they’re like before moving in. A home is a massive investment that will likely end up forming part of one’s retirement plans, and is also in addition to that a major financial commitment. Don’t buy hastily or impulsively.

Finally, shop with confidence. According to John E. Bell, III, Executive Director of the VA’s Loan Guarantee Service at the Department of Veterans Affairs, 80% of veteran borrows close once they start an application. Although this has been somewhat more difficult in the volcanically hot real estate market of the last couple years, real estate agents specializing in VA Home Loans are reliable mediators and know how to guide buyers through the process.

DON’Ts

Use the loan to buy rental properties. The VA Home Loan is intended for veterans looking for a home for their family, not a convenient way to save a few bucks on an investment. There are potential legal penalties for abusing the benefit. More important, abuse is a violation of the same code of conduct that governed good behavior within the military.

Look for fixer-uppers. A key component of the VA Home Loan is that the house being bought needs to be a solid bet that the VA can back, if, worst case scenario, the veteran cannot meet their fiduciary responsibilities. This rule fulfills two functions. First, it preserves the VA from taking on bad properties. Second, it keeps veterans from being swindled by unscrupulous realtors. If a house has a roof leak, or structural damage, and it appraises for less than its selling price, one will not be able to take full advantage of the VA Home Loan, either by having it denied or being compelled to put some money down up front.

Overestimate your ability to pay mortgage and other home costs. There’s an old joke about homes, aka “money pits.” It goes like this: “I finally found out how to have one million dollars in real estate. Start out with two million and in no time at all, you’ll have one.” The real estate market is fickle and subject to complex variables over which nobody has control, and which only the wealthiest people or businesses can absorb. Beyond that, home ownership is filled with costs one will encounter almost immediately after purchasing a home in some form: roof replacement, paint, driveway, surveying, water heaters — and the older the home, the more expensive a proposition repairs and upkeep can be. It is irresponsible to be anything other than conservative, especially when shopping for one’s first home, taking these factors into consideration alongside drastic swings in the market as well as property taxes. Don’t get out over your skis! The VA has a reputation for not interrogating veterans’ revenue as rigorously as they could — which is probably the right thing to do, considering that veterans are adults — but it also means not assuming that the VA will tell veteran home shoppers that they can’t truly afford a house, with its various costs and requirements.

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