Housing for Veterans: I will pay for your appraisal & part of the inspection AND Info on VA Loans!

On Veterans Day, I thought I would give Veterans (and those who may sell their properties to Veterans) some information about VA Loans.

But first, I would like to announce my new Veterans Initiative! To get more of our country’s heroes into homes, I will pay for both the HOME APPRAISAL (a $450 value!) AND the WOOD DESTROYING INSECT INSPECTION (a $125 value!) for Veterans of any Branch of the Military AND Peace Corps Volunteers when they make a purchase through me! Thank you for your service!

Now, on to the VA Loan program!

VA Loans give Veterans an opportunity to purchase a home with no money down. That is a great benefit, since normally our down payments are 3-20% of the home’s sales price. For a $350,000 property, that is a minimum of $10,500. With interest rates so low, Veterans can take advantage of obtaining the maximum amount of low cost money.

But to put this in perspective, normally when one is thinking of making a home purchase, one needs to not only have a down payment, but also closing costs and at least 2 months of payments in reserve. As we have said, the down payment is a minimum of 3% of the sales price.

Closing costs are generally 3-6% of the sales price. Closing costs can vary by lender but are also affected by other factors. They include lender fees, attorney costs, title insurance, homeowners insurance, inspection costs, the appraisal fee, property taxes and fees and costs that need to be paid back to the seller (any taxes, sewer or HOA fees the seller has paid in advance and, if there is oil in the tank, the buyer pays the seller for its value, etc).

So, when thinking of making a $350,000 purchase, a veteran will need to have $16,000 to $27,000 saved, instead of $26,000 to $37,000. VA Loans generally do not allow for seller concessions to pay for closing costs. So, “no money down” does not mean “no money in savings”. It is good for sellers to know that when someone qualifies for a VA Loan, the Veteran is a qualified buyer, who is capable of repaying the loan and has savings.

Another great benefit to Veterans in using a VA Loan is that they do not have to pay mortgage insurance. Generally, when a buyer obtains a mortgage with less than 20% down, they pay a monthly fee that can be $125-150 per month in mortgage insurance. For a Conventional loan, private mortgage insurance (PMI) remains on the loan for a minimum of 5 years and until you have 80% equity in the property. For an FHA loan, the premiums are higher than for PMI AND they remain on the loan for the duration of the loan, regardless of equity. To remove PMI, one needs to pay for an appraisal after petitioning the lender. This savings can be in the tens of thousands for Veterans.

Also with VA Loans, the government prohibits Veterans from paying for the Wood Destroying Insect Inspection. Random, I know. This cost is about $125 and sometimes sellers will actually choose another offer so they do not have to pay this minimal cost. In effect, the government is offering a benefit that they are not funding and are actually hurting the Veteran in that it can anger the seller. To combat this, when I work with a Veteran on a home purchase, I pay for the Wood Destroying Insect Inspection.

Often, it is touted that VA loans have better rates, but rates vary and I do not see VA rates consistently below other rates in this market. In fact, sometimes they are a little higher. This, as well as all loan information, is something to check directly with a lender.

If you, or someone you know, has served our country, I would be honored to help them purchase a home!