I Heard Using My VA Loan May Not Be a Great Idea...
What?! This was said to me in an e-mail by a military home buyer looking to move here to San Antonio Texas when he retires from the Army. First, I must say that I am flattered that he called me to be his San Antonio Buyer's Agent and that, although he and I were stationed together in FT Carson Colorado and went to war together, he isn't obligated or anything...., LOL :)! I digress, and let me get on with the point of this post....using your VA Loan.
If you have served in the military, (at least completed a tour of duty), you are entitled to use a VA Loan to purchase a home. This is a huge benefit for military home buyers looking to get into their first, or even subsequent homes. Now...let me pause for a minute to say this...I am not a lender, nor am I licensed to be one. I am a Licensed Texas Realtor® AND a retired Army Medic..AND I have used my VA Loan entitlement more than once. The advice I am giving comes from that perspective. At the end of this, you are curious to see if you would qualify for a VA Loan and this is something you would like to do, give me a call and I will direct you to some terrific San Antonio Texas VA Lenders that I know.
Back to the show...
A VA Loan is a great way to purchase a home usually affording the military home buyer an opportunity to purchase a home with no money down. Often times, the earnest money that you put towards the home you want to buy is refunded back to you. Does this mean that there are no costs when buying your home with a VA Loan...nope...it means you can get the loan with no money down. In a conventional loan, the bank (lender) will usually expect 5 to 20 percent down on the home and in an FHA loan a borrower is required to put down at least 3.5 percent. There are still costs associated with the buyer, for example closing costs and pre-paids. The good news for VA Loans is that sellers can contribute up to 4% of a VA buyers closing costs. Everything is negotiable here in Texas and we definitely ask for what we can get :)!
A VA Loan does come with what is called a funding fee. This is how the VA guarantees your loan and prevents you from paying Private Mortgage Insurance. For a military buyer using the VA Loan for the first time and putting no money down, a 2.15% funding fee is charged. On a $100,000 home, this would amount to $2150. The funding fee CAN be financed into the loan and often times is. If, you have used your VA entitlement before and have since sold that home and want to use it again, you may. For subsequent uses, the funding fee is doubled at 3.3%. A little hefty, but may still be worth it and again may be financed. Other good news is this, if you are, (as many of us are) a disabled veteran by at least 10%, part or all of that funding fee may be waived.
There are so many benefits to gaining home ownership with a VA Loan that it's truly hard to mention any cons. There can be a couple though. Since a VA Loan is 100% financed, you will build up equity slower. Those first few payments (and I say few flippantly) will mostly go towards the interest rate..(which by the way, ARE TERRIFIC right now) and a few dollars towards your principal, (the main part of your loan). This is true for every loan by the way, but in a conventional loan, if you put $10,000 down on a $100,000 house, then you will be paying of $90,000 and already have $10,000 in equity, (very simplified explanation). If the conventional buyer ended up having to sell right away, they may have a chance of gaining that $10,000 back, (may). With a VA Loan, if you were looking to sell right away to try and make a profit...well, it's not likely to happen.
By the way, you cannot use your VA Loan for investment property, (that I am aware of). You must use the loan for your primary residence and I believe you cannot sell until after 2 years. The max eligibility on a VA Loan is $417,000 here in Texas. Trust me, that's A LOT of house here in San Antonio Texas. You must also qualify for a loan as well. Having served in the military is the first qualification, but you do need to qualify financially as well and have a good credit score. Being in the military alone will not guarantee you a VA Loan. The lenders generally look for a clean credit history for the past 12 months.
For a military veteran looking to buy their retirement home in San Antonio Texas, the VA Loan is a GREAT Deal though. Since this is going to be most likely a home you will live in for a very long time, the 100% financed loan is awesome and one of your EARNED benefits for serving your county so proudly. I have used it, and with my husband's VA entitlement, plan to use it again. So, if you are in the military or becoming a military retiree and looking to buy your first or your retirement home and are ready to take advantage of the VA benefit you have earned, give me a call and I will get you squared away, (or whatever the Marine, Air Force and Navy folks say, LOL!)!
Brenda Mullen – San Antonio Texas Real Estate Professional
Selling a San Antonio Texas area home involves many steps and having an experienced San Antonio Texas Real Estate Agent by your side will make the transaction run a lot smoother. I would love to be your San Antonio Texas Area Real Estate Professional! I assist both buyers and sellers in the San Antonio Texas area with either the purchase and or sale of residential real estate.
As an Accredited Buyer’s Agent, I have received special training to guide and educate you through the entire home buying process. From start to finish, I listen to your needs and desires in what you would like and take the information you give me to find you home.
As your San Antonio Texas listing agent I am well versed on the local San Antonio Texas area Real Estate Market. You can expect personalized service that includes a detailed consultation on how to best position your home to be competitive in today’s market with an in depth comparative market analysis, and advice on staging. I use the latest and most up-to-date marketing methods to get your home in front of as many buyers as possible. Being your San Antonio Texas area Realtor® not only involves just finding the home or selling the home, but being your guide, negotiator, advisor and advocate and making sure that your needs and goals are met. Being your San Antonio Texas area Realtor® is one of my truest passions, and “Helping You Find Home” is my number one priority.
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