Home Buying Tips For Veterans
Home Buying Tips For Veterans
The home buying process is unique for military service members and veterans, especially those who choose to take advantage of their VA home loan benefit. Our first tip is to find a real estate professional that is familiar with VA home loans, as not all homes qualify, and not all lenders are knowledgeable in the VA home loan process. An agent who knows the ins and outs of the VA home buying benefits can save you money.
VA home loans are issued by private lenders and backed by the U.S. Department of Veterans Affairs (VA). This enables eligible borrowers to purchase homes that they may not otherwise qualify for. The VA backing allows homebuyers to secure lower interest rates, and possibly more expensive homes, and to make the purchase without a down payment. The banking industry calls the VA home loan program the best in the country. It is hard to understand why many military service members and veterans do not use the program. The benefits and requirements are explained below in an effort to help you better understand the details of the program.
The primary advantage of the VA home loan program is that it makes it very easy to secure financing to purchase a home with no down payment required. The program also allows military service members and veterans to qualify for the home loan with lower income and credit score requirements than conventional home loans. VA home loans also do not require buyers to purchase Private Mortgage Insurance (PMI), thus saving the cost of insurance payments.
Even though a down payment is not required, there will be some one-time fees at closing for the VA home loan. You still must qualify through your lender. First-time VA home loan borrowers, paying no money down, will incur a fee of 2.15% of the loan amount. This fee is decreased to 1.25% if you are making a down payment of 10% or more. National Guard and Reservists will usually pay approximately a quarter of a percentage point more in fees. You must first receive a Certificate of Eligibility (COE), in order to qualify for a VA home loan. Eligibility requirements include:
- Serving 90 consecutive days of active service during wartime
- Serving 181 days of active service during peacetime
- Being an active member of the National Guard or Reserves for 6 years or more
- Marriage to a service member who died in the line of duty or as a result of a service-related disability
Your lender can assist you in requesting your COE from the Veterans Administration. You will need to provide supporting documentation. You can use this checklist to get prepared.
If you do not qualify for a VA home loan, look to see if your state offers any benefits for veterans seeking to purchase a home. In our region, North Carolina offers the NC Foreclosure Prevention Fund that provides zero interest loans up to $36,000 for up to three years to help veterans (discharged after January 1, 2008) meet their mortgage payments while undergoing job training to prepare for their life after leaving the military.
Be prepared. Most VA home loan lenders will require that you purchase homeowners insurance in order to secure your mortgage loan. Many lenders will require that you pay one year’s worth of insurance payments upfront and continue to make monthly payments into an escrow account. This can usually be bundled into your mortgage payment. Many home insurance companies offer discounts to veterans. Some companies, such as USAA and AFI, cater specifically to military personnel and offer competitive rates with added benefits. We suggest that you shop and compare insurance rates.
These tips should get you started on the road to homeownership. The more you know and are prepared, the smoother the process will be. Remember, our experienced, veteran-friendly real estate specialists stand ready to assist you. Contact us today.
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