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Many still believe the American dream means having a place to call home. If you have served in the military, the U.S. Department of Veterans Affairs offers many programs to help those who have served to get a home loan. The process, unfortunately, is not without important decisions to be made that can greatly effect the success rate of obtaining one of these loans. Even if you have purchased a home before, many can struggle with the purchase process and dealing with mortgage brokers. You will have a much higher success rate by avoiding these common mistakes before you start your home search.
Mistake No. 1: Not Using a Real Estate Agent with VA Experience
If your goal is to obtain a VA loan, you are best suited to choose an agent with prior experience in helping people obtain them. Many are unaware, but when you purchase a home through the Veterans Affairs department, the home must meet certain criteria. Typically, homes that need a lot of work and even homes that are newer won't qualify. There are also certain debt-to-income ratios and loan limits in order to qualify. An experienced agent will know about these and be able to advise you as the home buyer.
Mistake No. 2: Not Being in Constant Communication with Your Lender
According to the VA, about 33% of veterans do not even know they have access to the best home loan option on the market. When initially meeting with your lender, be sure to go over all of your loan options so you can be well informed. One of the best perks you get through a VA loan is the ability to purchase with a 0% down payment (you read that right). Having the ability to do this makes it possible for veterans to purchase their homes much sooner than if they had to save up for a down payment.
These loans also come with a lower interest rate than other loans and do not require mortgage insurance. They also are more forgiving to applicants with lower credit scores. What's not to love! So make sure when you first meet with your lender that they are aware of your status as a veteran.
Mistake No. 3: Not Being Aware of all the Upfront Costs
Although you are in a position to save a ton with your VA loan, there are still upfront costs that you will have to deal with. Keep in mind that your closing costs make up more than just your down payment. There are also an assortment of fees and taxes that are included with your closing costs and are separate from your down payment. These can include things like lender fees, appraisal fees, inspection costs, and transfer tax, to name a few. It's best to know ahead of time that you will still need some upfront cash in order to close on your new home.
Mistake No. 4: Not Thinking of Your Home as an Investment
Even if you plan to move out of the area in the next few years, that doesn't mean you shouldn't buy. Your home could very well end up being a great investment. As long as you do your research and buy in a high demand area at a price range where homes are moving, you can always sell it if you need to move. Better yet, you could hang onto it and have renters pay your mortgage for you. Why not, you are already getting a great rate!
Even if you don't want to become a landlord, a VA loan is assumable, which means you can transfer the property and loan to another veteran. Also don't forget, your VA home loan benefits are available to you more than once so you can own more than one property through the program at a time.
Mistake No. 5: Making Big Purchases Prior to Settlement
It's easy for buyers to get excited once their offer is accepted and a lot of the time they are eager to make the home their own. It's very important to make sure you officially own the home before going out and buying new furniture or appliances. This can mess up your financing and delay your closing as you still must meet certain lender requirements. To be on the safe side, make sure you wait until after the closing takes place to make big money moves.
