Are You a Veteran? There Are Home Loans Just For You
Whether you're a veteran or not, you are probably somewhat aware of VA loans.
They are backed by the government specifically for military veterans and allow our service members to buy homes with lower interest and $0 down payment.
Sounds like an awesome benefit. But there are some things to be aware of if you want to take advantage of this benefit as a military member (active, inactive or retired). Just know, there is no free lunch.
While it is very helpful for home buyers to get into homes without any out-of-pocket costs, the truth is, there are costs built into the loans that make them more expensive than they appear.
A first-time user of the VA Loan (you do not need to be a first-time home buyer) is going to pay a 2% fee to the VA that gets wrapped into the loan. The fee acts somewhat the same way as private mortgage insurance (PMI). The funds are used to cover defaulted loans, in theory.
Ironically, if you use the loan a second or third time, the fee goes up to 3%. Don't ask why.
Another factoid to be aware of when deciding whether to use your VA benefit is that you can only use it on one house at a time and it must be your primary residence. So, you definitely cannot use it for investment property.
And last, there are limits to how much you can borrow for the house and it changes from state to state and even region to region. Thankfully, it's pretty high in Hawaii (around $700,000).
Also, be aware that not all VA loans are created equal.
They are issued through private lenders and while the lenders have some restrictions, they do have some leeway. You need to shop around just as you would a traditional mortgage.
If you are, or have been, in the military, this is a great benefit for you to use. Denise is a veteran (nicknamed Major Mom) so she is a great resource.
Thank you for your service and have a great Veteran's Day!
Cover photo MLS#611861 offered at $650,000 in Hakalau, HI