5 Things Veterans Need to Know When Buying a Home
by PCSgrades Staff - November 3rd, 2022
Homeownership is at the heart of the quintessential American Dream. Military families and veterans have unique needs when it comes to buying a home. Whether it's understanding your financing options or choosing the right home for your family, military families deserve the very best. That's why we've compiled this list of 5 things you should know when buying a home.
5 Things Military Members and Veterans Should Know When Buying a Home
Before you start your home search, there are a few considerations to take into account. Being informed about your options can make the home-buying process much less stressful.
I love helping military families buy homes. There's something incredibly rewarding about giving back to those who served the country. But it's always disheartening to talk to a family that wants to buy a home, but just isn't ready.
Buyers can set themselves up for success by getting prepared ahead of time. Learn about your financing options. Talk to a lender. Educate yourself about the home-buying process. Save for your down payment or, if you're not doing a down payment, save for closing costs and other expenses.
That way, once I come into the picture, you're ready to put in an offer when that perfect home comes along!
-PCSgrades Affiliated Real Estate Agent
1. Understand your loan options, including the VA loan
The VA loan is just one of many financing options available to military buyers. The VA loan is different from other loan programs because it's only available to military service members, veterans, and certain civilians.
VA loans are guaranteed by the government and therefore come with a few perks. The most significant perk is that no down payment is required. None. Nada.
However, because the government is involved, eligibility comes with many rules and requirements, so one of your first steps is to verify your eligibility.
Keep in mind that no down payment isn’t the same as no closing costs. Also, just because you qualify for a VA loan does not mean you need or even want to use it. It is crucial to weigh all your financing options. In some circumstances, you may find it more financially advantageous for you to use a different type of loan.
Speak with a mortgage lender to learn more. Which brings us to our second point...
2. Talk to a mortgage lender
Before you even call a real estate agent or look at houses, you need to talk with a lender (unless you’re a cash buyer, and then you can pat yourself on the back and proceed to step 3.)
A lender should be your first stop for two reasons. First, an experienced lender can manage expectations when it comes to your buying power. Second, they can pre-approve you, giving your agent and home sellers peace of mind about your financial fitness.
A mortgage lender will pull your credit, ask for financial statements, and ultimately give you a pre-approval and a Certificate of Eligibility. Many agents will want you to get pre-approved before they will even schedule home showings. You can't make an offer on a home before you have pre-approval, so a lender should be your first stop.
Your lender will be integral throughout the buying process. Once you’re under contract for a home, your lender goes to work to finalize your financing. They will also work with your agent and the title company to schedule closing and provide final payment information.
Not all mortgage lenders are created equal. Before choosing a lender, compare loan estimates, interest rates, and any fees due at closing. More importantly, make sure you choose a lender who is familiar with military homebuyers and understands the VA loan.
Having an organized, detail-oriented, experienced mortgage lender can make buying a home much less stressful and complicated. Your lender should take the time to explain the mortgage process and answer any questions you might have. A great lender will be your partner and look out for your best financial interest (worthy to note: not all states require lenders to be trusted fiduciaries - that is, they are bound to look out for your best financial interest over their business ones. So, it’s super important to find someone who is either mandated to do this or makes it a point to do it on their own).
There is so much more to choosing a lender than the interest rate. Your lender will be one half of your home-buying dream team, so take this decision seriously.
Ready to chat with an experienced and knowledgeable mortgage lender? Click here to find one near you.
3. Choose a real estate agent who knows military life
Your real estate agent is the second half of your home-buying dream team. This is the person who will guide you through the process from this point forward. Your agent will likely communicate with you daily for at least a month, or even longer. It is essential that they are competent at their job and that you enjoy working with them. Life is too short to dread answering the phone every time your real estate agent's number pops up.
PCSgrades has an exceptional network of trusted, experienced, A-Team agents that will not only provide world-class service, but can offer a cash-back reward of $350-$7500 on your home sale or purchase. Having an agent that knows your unique needs as a military family and has a proven track record of success will save you time and money in the long run.
Learn more about the cash-back program and connect with a verified agent here.
4. Start saving money now
Start saving immediately. Even if you’re using a VA loan, you will still have closing costs to cover, not to mention a host of other expenses.
Also, pay close attention to frivolous “Section A” fees in your loan estimate. You can avoid hundreds or thousands of dollars in out-of-pocket lender costs. Still, you’ll likely need to bring several hundred or even thousands of dollars to the closing table to cover escrow requirements, such as pre-paid hazard insurance, pre-paid taxes, and title insurance, just to name a few.
These fees do NOT change from lender to lender and are fixed costs associated with the home. However, you can shop around for title insurance/settlement companies to have some control over the settlement fees.
After the closing table, you’ll have additional costs of moving and setting up a home, including installation fees or deposits for cable and utility companies. Some utility companies waive setup fees for the military, so be sure to ask!
You’ll also likely have a few renovations in mind; perhaps carpet or duct cleaning, painting, and new door locks. If you’ve bought a new construction home, there are many move-in expenses to consider, including blinds and window treatments (unless you plan to give the neighbors a show!), fencing, and appliances.
Buying a home is a significant financial investment. It's definitely worth it, but only if you are financially prepared. Too many times, I've seen buyers get in over their heads financially. Being "house poor" isn't any fun. I want my clients to enjoy their home. Not to work double shifts just to be able to pay for it.
My biggest advice is to only look at homes you can afford. If your agent is suggesting houses that are outside a price range you're comfortable with, that's probably an indication that you're working with the wrong agent. They should always have your best interest in mind, not their own.
-PCSgrades Affiliated Real Estate Agent
5. Don't buy anything when you're under contract
This is a hint many first-time buyers never consider, but it's incredibly important to keep your credit score the same once you're under contract. After you're locked into a loan (again, this tip doesn’t apply if you are a cash buyer):
Don't make any major purchases, such as a new car or even appliances you might want for your new home.
Don’t change jobs, become self-employed, or quit your job.
Don’t use credit cards excessively or let accounts fall behind.
Don’t do anything that will originate an inquiry into your credit except shopping around for mortgage rates in a two-week window.
Don’t make any large deposits without discussing it with your loan officer first.
Don’t change bank accounts.
Don’t co-sign on a loan for anyone.
An underwriter investigation (done by the lender to secure your loan) is second only to an IRS audit, so make sure your financial world is stable, even dull. Any change at all could ruin your chance of closing on your home. Tread lightly, and when in doubt, call your lender.
There you have it - our top tips for buying a home. You’ll have plenty of other decisions to make along the way, but as long as you have a great lender and a great real estate agent to help, you can tackle them all in stride.