Having a place to call your own, whether you’re going to be there for four years or forever, it’s an essential part of the American dream. The US Department of Veteran’s Affairs offers plenty of great programs to help those who have served in the military realize the dream, but the process isn’t foolproof. People can and do make mistakes when buying their first, second, and even their 10th home. You can keep from having your own tales of woe by avoiding these five mistakes even before you start your home search.
Mistake #1: Not Getting A Realtor Who Knows VA Loans
If you’re getting a VA loan, make sure you work with a realtor who understands the process. A lot of people go with an agent who doesn’t understand the VA system. It’s important to remember that the VA doesn’t underwrite each and every house, so it’s a huge, huge deal to use an agent who understands the VA process and the VA appraisal process.
When you’re buying through the VA, you really need to find a home that meets VA property requirements. Remember, a VA appraiser will have specific criteria for houses that are fixer-uppers, and some new homes won’t even qualify. Save yourself the headache of making an offer on a home that may not get approved, and work with an experienced VA realtor from the start.
Mistake #2: Not Communicating With Your Lender
Veterans have access to arguably the most powerful mortgage option on the market, but about one in three home buying veterans don’t know they have a home loan benefit. When you first meet with your lender, be sure to discuss your military status so that you can be informed about all the potential advantages to you.
One of the biggest benefits you will get with a VA loan is the ability to buy with 0% down (which is amazing!). VA loans also come with low interest rates, they don’t require mortgage insurance, and have more forgiving credit requirements.
Veterans should ask their lender if they offer any incentives for veterans. Some lenders will waive appraisal fees, offer a waiver of the origination fee, and other lender credits. Pretty much everything will get easier as soon as your lender knows your military status, so speak up.
Mistake #3: Forgetting About All The Other Costs Associated With Buying A Home
Although you have a ton of financial advantages with your VA loan, you will also have some costs to deal with. Probably the biggest mistake made by active duty members is entering the home buying process and not knowing there are other costs associated and fees necessary to buy a home. When you’re buying a home, you likely have to plunk down a bit of cash for things like the home appraisal and the inspection. It might not cost much in the larger scheme of things, but it will help speed things along if you come prepared knowing what you have to shell out money for.
Mistake #4: Not Thinking Of Your Home As An Investment
Maybe you think there’s no sense in buying a home if there’s a chance that you might relocate in the next three years, but that doesn’t mean that you shouldn’t buy one. In fact, that home could end up being a smart investment.
Here’s how. First, you search in high demand areas, or choose a popular home style or size. Doing this will give you a better chance at resale if you need to move later, or you can hang onto it and rent it out.
Now, if you don’t like the idea of renting out your home and becoming a landlord, did you know that a VA loan is assumable, meaning that you can transfer the loan and the property to another vet? Or you can just sell the home to any non-military buyer. Don’t forget, you can use your VA home loan benefits over and over. So, you can own both a rental property and a new home.
Mistake #5: Making Other Big Purchases Before The Closing
Now once you find a home and your offer is accepted but not yet closed, you’re probably going to be excited about moving in and maybe go and buy that big screen TV, and maybe finance a new living room set that you love, and much more. But don’t do that yet. Hold off.
Opening any lines of credit or making big purchases after the loan is approved is a common mistake. This can often change a veteran’s credit score and make them ineligible for the loan. Wait until after the closing to make any other financial moves. Better safe than sorry, and it helps keep your loan right on track.
Source: Get Real Group