The Definitive Guide to Home Ownership for Veterans
Updated: Aug 18
Being a veteran gives you several advantages when you’re in the market for a new house. Not only can you take advantage of government home loans and grants, but you can also often ask for and receive concessions from service providers. In this guide, TVERDOV Housing clarifies the process of buying a home for veterans, with an emphasis on saving money.
Step 1: Do some (non-optional) financial research
First, you need to take stock of your financial situation. Acquire an overview of your finances – short-term and long-term – and plan out how you’re going to pay for your new home.
Review your income and debts
To secure financing for your home, you need a steady income. Furthermore, your debts shouldn’t outweigh your earnings. Start by reviewing your cash inflow and outflow. Lenders will look at your debt-to-income ratio before agreeing to mortgage your house. The stronger your position, the better the deal you will get. Repair your credit by holding down a job, if you need to, before approaching a lender.
Research your financing options
Based on your current financial state, you have several financing options. Every type of mortgage has its pros and cons. We offer three cost-effective possibilities:
VA Loans: The U.S. Department of Veteran Affairs either offers these directly or through a third party by backing the loan amount (similar to offering collateral, which makes lenders comfortable with offering them). Every veteran’s allowance differs, and you need to file paperwork to get approved. Lenders may give you up to 4 times the approved “collateral” from the government. This option is beneficial for many reasons – no down payments, looser credit requirements, lower interest rates, and no mortgage insurance.
FHA Loans: The FHA program is similar to the VA program. It has the lowest credit score requirements. Other benefits include lenient underwriting guidelines, low down payments, and competitive interest rates.
Conventional Loans: VA loans are sometimes not an option – say if you are purchasing a secondary residence. In such cases, you may have to apply for a conventional loan. Of course, they have stringent income requirements and come with higher interest rates (at least 0.25% more).
Research every single option using sites like Penny Mac US, and thoroughly and run the numbers carefully for each to figure out what’s most affordable. As a veteran, you may qualify for other housing assistance. It’s all going to benefit you.
Save money for expenses not covered by your loan
Not all expenses for the purchase of your new home can be finances – you have to foot the bill yourself (or convince the home seller to pay for it). VA loans, for example, can’t be used to pay the VA funding fee, survey fees, inspection charges, and title examinations. Inform yourself of all home purchase-related expenses and double-check what your loan can and can’t cover.
Allocate time for the whole process
Securing a loan won’t happen overnight, and neither will the house purchase. You have to prepare the necessary paperwork, approach a lender, acquire pre-approval, and then find and purchase a house. According to Chicagoland Community Management, the whole process can take months (usually 6 months or more). Prepare accordingly.
Step 2: Find the right place, at the right time
Now that you have your finances figured out, it’s time to go house-hunting.
Consider your needs: Start by evaluating what you and your family want. Figure out the ideal community type, location, amenities, floor plan, and related details.
Focus on the cost of living: Some locations are cheaper to live in than others. Try to find a good balance of lifestyle and cost.
Rope in a knowledgeable agent: While you could find a house yourself, an experienced agent from TVERDOV Housingcan usually do it faster, not to mention help you get the best deal on your home. They can also assist you with their knowledge of veteran benefits and related processes.
Factor in seasonal pricing fluctuations: The best time to buy a home is usually fall and winter – October to be specific, according to The Motley Fool. If you purchase in May, expect to pay through your nose.
Step 3: Make an offer, purchase, and move in
Once you spot a likely-looking house, it’s time to close the deal.
Make an offer: Make an offer on the house. Consult with your real estate agent and research the property market before you do this. You will likely have to negotiate a mutually-agreeable price. You will have to sign an agreement.
Pay for the house: Put down a deposit on the house, and then set up an Escrow payment. You will have to pay closing costs (2-5% of the house price), repairs, moving, and other expenses. Keep in mind
Inspect the house: It’s a good idea to inspect the house thoroughly before the Escrow payment goes through. Check if the house has defects not disclosed.
Use your veteran status: Every organization or individual you consult along the way may offer veteran benefits or discounts, allowing you to chip-off the final purchase total. It doesn’t hurt to ask. Also, there are Covid-19 assistance programs, veteran programs, grants, and funds out there. Research is your best friend.
Move in: If everything looks good, it’s time to move in. Congratulations on starting a brand new chapter in your life!
Conclusion
Take advantage of your veteran status to secure financing as well as get the best deal – you deserve it. Also, don’t hesitate to utilize experts – like loan officers and real estate agents – to help you figure out the intricacies of the home purchase process. You likely won’t save much doing it yourself, and they may point you to veteran savings or benefits you didn’t know about.
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