Blog posted On January 22, 2020
Owning a home is an integral part of the American Dream—the same American Dream that our Veterans and military fought for. The U.S. Department of Veteran Affairs (VA) offers several options to help those who served in the military get a home loan. However, the process isn’t foolproof, and it’s possible to make mistakes—whether it’s your first home or your tenth.
VA savvy real estate agents reported these as the five most common mistakes that VA borrowers make, and how to avoid them.
#1: Not Using a VA Savvy Real Estate Agent
When purchasing a home with a VA loan you should work with an agent who understands the VA loan process. When you buy a home through the Veteran Affairs department, you’ll need to find a home that meets VA home loan property requirements. An agent who is well-versed in VA loans will be able to best assist you in finding and buying a home that meets the VA loan criteria.
A VA savvy agent should never lead you in the wrong direction or encourage you to make an offer on a home that may not qualify for a VA loan.
#2: Not Communicating with Your Lender
Veterans have access to arguably the most powerful and beneficial home mortgage option on the market. However, approximately 1/3 of Veteran home buyers don’t know that they are entitled to this benefit.
When you first meet with your lender, be sure to discuss your service member status. Your lender will then inform you of all the benefits and advantages available to veterans and military personnel, such as 100% financing through the VA loan.
100% financing means a 0% down payment, which can help you buy a home years sooner than if you had to save up for a down payment. VA loans also come with low interest rates and don’t require mortgage insurance. So, make sure you inform your lender of your military status and ask about all of the benefits available for veterans.
#3: Forgetting About All Upfront Costs
While VA loans come with numerous advantages, such as 0% down payment options, there will still be some borrower costs to pay upfront. Even if you are buying a home with little to no down payment you’ll still have to pay for things like an inspection and home appraisal.
Though these expenses won’t break the bank, it’s best to expect a few upfront costs.
#4: Not Thinking of Your Home as an Investment
Even if you don’t plan to relocate any time soon, it’s still important to see your home as an investment. Purchasing a home can help you build wealth, which accumulates in the form of home equity.
Search for a home in high-demand areas or choose a popular home style. This will give you a better chance to sell it later when the time comes to relocate. When you need to move but you’re not quite ready to sell, you can also rent out the home.
VA Loans are also assumable, meaning you can transfer the loan and property to another Veteran. Or, you can just sell the home to a nonmilitary buyer.
#5 Making Other Big Purchases before Closing
Last but not least, this mistake can apply to any type of home loan. Once you find a home and your offer is accepted, it can be tempting to start shopping for furniture, technology, and decorations for your new place. However, that big-screen TV and furniture set can wait until after your loan has closed.
Opening a new line of credit or making a big purchase after your mortgage approval can impact your credit score, making you ineligible for the loan. Even if your loan has been approved, you’re not a homeowner until after your loan closes. Wait until after the closing to make any big financial moves, just to be on the safe side.
Purchasing a home with a VA loan can make your home buying process easier and more financially sound. No home buyer is immune from making mistakes, but a VA savvy real estate agent and a knowledgeable lender can help you along the way. If you have any questions about how a VA loan can benefit you, let me know.