According to the National Association of Realtors, veterans make up 16 percent of recent homebuyers. Of those buyers, 19 percent of them are first-time buyers. For those contemplating whether to build or buy a home for the first time, a large consideration will be the cost. Like many other homeowners, getting their finances right to pay for a deposit, mortgage, home maintenance, and property taxes can be a large worry for veterans. With life after the military presenting several financial issues, many veterans are wary of homeownership and its costs. Yet the recent news of VA-backed home loans skyrocketing should serve as a reminder to the veterans out there looking to buy their first homes – there is help out there to help you cope with the cost of becoming a first-time homeowner.
Move Past The Misconceptions Of VA-Backed Loans
If you’re a veteran and have a steady employment stream, there has never been a better time to apply for a home mortgage or loan. For the past year, mortgage interest rates have hit record lows, and the recent change in law has widened the eligibility criteria for VA loan applicants. Such welcome changes have meant buying a home for the first time is now much more affordable for veterans, and their home price caps have become a lot less restrictive.
As of 2020, VA limits vary according to county, and can go all the way up to $822,375. If you’re a veteran homeowner and qualify for full entitlement, this means you are now able to look at houses in more expensive cities. This also targets another key concern for veteran homebuyers: the eradication of your life savings when buying a home. Lenders are also hopping on board with a more tailored offering for veteran and active service personnel. For instance, a government-backed VA lender recently announced a revamped loan offering for VA loans, which includes a shortened closing timeline. Remember: before you can secure a VA loan, you need to apply for your VA Home Loan Certificate of Eligibility and have your DD214 on hand.
Always Budget For Closing Costs – Even With VA Loans
Every homeowner should budget for additional costs of home buying, including the closing costs. In 2020, Accelerate sent out over 7,000 notices promising no closing costs on VA loans. In a further court decision against Accelerate, the Consumer Financial Protection Bureau (CFPB) announced that this was inaccurate. In fact, Accelerate has never closed a VA loan without any closing costs, according to the CFPB. The move by Accelerate and other private lenders led to the CFPB issuing sanctions against nine private lenders that initiate VA loans.
According to estimates by Veterans United, closing costs on VA loans can average between 3 and 5 percent of your loan amount. However, this will vary according to your lender, and the area you’re buying in. Remember that you will still need to pay for homeowner insurance and property tax unless you are exempt.
Check If You Qualify For The Housing Choice Voucher Homeownership Program
You may be able to access additional help with the costs of owning a home as a veteran homeowner. The Housing Choice Voucher Homeownership Program helps veteran homeowners with their home-owning expenses, including mortgage interest, insurance premiums, home maintenance costs, and utilities. Since 2000, veteran families have been able to use their vouchers towards buying a home, instead of renting. So, if you’re a low-income family, the program could help you reduce your home-owning expenses to 30 percent of your monthly income. If you don’t have a military background, you can still opt for assistance through lenders like Primary Residential Mortgage and apply for a USDA loan.
Finally, don’t be afraid to shop around. While VA loans come with lower deposits, they are not always the best option for your budget. There is a long list of programs aimed at helping veterans become homeowners. You just need to know where to look.
