Thank You For Your Service

As we commemorate another Veteran's Day, let us all take a moment to thank our armed services personnel, past and present, for their service. As a fellow Veteran myself, I understand the sacrifices we have made and the honor that this bestowed upon us from having served. Veterans also have amazing benefits that can be used for buying homes or investment properties.

VA Loans is a powerful lending program that has helped more than 22 million service members become homeowners since 1944. The program can be used again and again provided the loans are paid off. However, there are restrictions in the type of homes on which you can borrow. If you are planning on buying a "fixer-upper", the VA loan program may not be for you as it's mainly designed for properties that are "move-in ready" condition. Therefore, an appraisal is mandatory and is usually paid for by the buyer though you may be able to recoup the cost upon closing. The appraisal results must meet stringent safety, structural and sanitary guidelines. If a home or investment property doesn't meet the criteria, the loan can be denied on that particular property. Or it might be suggested that certain repairs are made by buyers and/or sellers in order to pass the MPR's (Minimum Property Requirements). If should be noted though that an appraisal is not an inspection. Inspections are more in-depth, comprehensive investigations into the home.

A home inspector will thoroughly describe every weakness of a property making recommendations and sometimes provide an estimated cost of needed repairs. This becomes an excellent tool for negotiating the purchase price or other compensation to you, the buyer, therefore an inspection should NEVER EVER be skipped. Some buyers prefer to have the inspection before the appraisal step. But first and foremost do your best to select properties that are eligible for a VA loan approval. A note of caution: If purchasing in a Planned Unit Development or other properties where a Homeowners Association (HOA) may be involved, be sure to inquire into the likelihood of utilizing your VA benefits in that neighborhood. Proper financial position of the HOA is needed for VA approval and many lenders can tell you in advance if your chosen neighborhood should qualify...no sense chasing and falling in love unless you're sure your loan will work!

Stay away from a fixer-upper, farm land, vacation home or an "ineligible" investment property as they may not qualify for VA loan approval. You can buy a 1-4 multi-unit property, but you must make one of the units your primary residence and that must be accomplished within 60 days from closing. Not always easy if you are deployed, but the VA allows for a spouse to fulfill the occupancy requirements for an active duty member who is deployed. Being familiar with the intricate rules of a VA loan is crucial as understanding them means you are well on your way to the benefits they provide. Examples may include 100% financing, no private mortgage insurance, flexible credit standards and low closing costs. However the VA is not the actual lender...an approval VA lender is needed.

Loans are not issued by the VA, instead they are the agency that provides the guaranty, up to 1/4 of the loan amount, on the qualified mortgage loan. The loans may be available even if you have had a bankruptcy or foreclosure in your past. Typically mortgage insurance is a monthly fee you pay with other programs when you are not putting down 20%, but not necessary with a VA loan. However there is a mandatory VA funding fee, usually 2% of the loan amount. This funding fee helps the program move forward and can be rolled into the loan amount and waived entirely for those with service-connected disabilities. There are limits on co-borrowers. Having one who is not your spouse, or another veteran with VA loan entitlement who will live in the home with you, will require a down payment and not every VA lender offers these types of joint loans. There are also no pre-payment penalties with VA loans, should you decide to pay the loan off earlier. and there are many types of VA loans for many purposes such as VA Purchase Loans, VA Refinance Loans, VA Jumbo Loans and VA Streamline Refinance loans.

There are many benefits to using a VA loan, but there are also many requirements that must be met. Should you choose to utilize these benefits, get with an experienced Realtor that understands the issues, such as deployment and relocation, that military personnel go through. Also get with an experienced VA Loan officer that can offer you guidance in this transaction. The benefits are there should you qualify for them, so why not consider that as an option to use towards funding your dream home, investment property, and FUTURE!

And again, Thank You For Your Service.

(Information courtesy of military.com and veteransunited.com, a VA mortgage lender. Many other lenders offer VA loans, so shop around.)