Having a place to call your own -- whether you're going to be there for four years or forever -- is an essential part of the American dream. The U.S. Department of Veterans Affairs offers plenty of great programs to help those who have served in the military get there, but the process isn't foolproof. People can (and do) make mistakes buying their first home, second home, or 10th home.
You can avoid your own tale of woe (or head-banging frustration) by avoiding those mistakes before you start your home search. We asked VA-savvy Realtors to tell us which missteps they see the most -- and how you can do the whole thing correctly right from the start.
Mistake No.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.
"I see a lot of people go with an agent who doesn't understand the VA system," says Katie Fraser, a Realtor with Trident Realty Group Northwest in Seattle. "The VA won't underwrite [just] any house. It is a huge, huge, huge deal to use an agent who understands the VA system, the VA appraisal process, and what that all really looks like."
When you're buying through the VA, you'll need to find a home that meets VA property requirements. A VA appraiser will have specific criteria; for instance, fixer-uppers (and even some newer homes) won't qualify. Save yourself the headache of making an offer on a house that may not get approved, and work with a VA-experienced Realtor from the start.
Ask another vet for a referral, or get help from Veterans United to find the right pro.
Mistake No. 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, according to the VA. When you first meet with your lender, be sure to discuss your military status so you can be informed about all the potential advantages.
One of the biggest benefits you'll get with a VA loan is the ability to buy with 0% down (yes, we're totally serious). VA loans also come with low-interest rates, don't require mortgage insurance, and have more forgiving credit requirements.
"Veterans should ask their lender if they offer any incentives for veterans," adds Alissa Gerke, broker and owner of Select Realty Group in Columbia, MO. "I've seen lenders waive appraisal fees, offer a waiver of origination fee if the veteran has a certain credit score, or other lender credits."
That's right -- pretty much everything will get easier as soon as your lender knows your military status, so speak up!
Mistake No. 3: Forgetting about all the home-buying costs
While you'll have a ton of financial advantages with your VA loan, you will have some costs to deal with.
"Probably the biggest mistake I see is active-duty members coming into the home-buying process and not knowing there are other costs and fees necessary for buying a home," Fraser says.
When you're buying a home, you'll likely have to plunk down a bit of cash for things like a home appraisal and inspection. It might not cost much in the large scheme of things, but it'll help speed things along if you come prepared knowing what you'll have to shell out for.
Mistake No. 4: Not thinking of your home as an investment
Maybe you think there's no sense in buying if there's a chance you might be relocated in the next few years. But that doesn't mean you shouldn't buy; in fact, that home could end up being a smart investment.
By searching in high-demand areas or choosing a popular home style and size (like 1,500 to 2,000 square feet), you'll give yourself a better chance at resale if you need to move later. Or, you can hang on to it and rent it out.
"[My clients and I] often go out and look for their first rental home, not just a home for their family," Fraser says. "With so many in transition, they're able to purchase a home and it becomes an investment property for them when they go on to their next duty station or they move."
Don't like the idea of becoming a landlord? A VA loan is assumable (meaning you can transfer the loan and the property to another vet), or you can just sell the home to a nonmilitary buyer. And don't forget: You can use your VA home loan benefits again and again, so you can own a rental property and a new home.
Mistake No. 5: Making other big purchases before closing
Once you've found a home and your offer is accepted, you'll probably be excited to just move in already and make it yours. Maybe you have an eye on a new big-screen TV, and you're looking into financing a new living room set you love. But don't do that yet.
"Opening a line of credit or making a big purchase after loan approval is a common mistake," Gerke says. "This can oftentimes change the veteran's credit score and make them ineligible for the loan."
Wait until after closing to make any other financial moves, just to be on the safe side and to keep your loan on track.
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Watch: Housing Chief Gives Update on Growth of VA Home Loans