Veterans and active military personnel have some of the best home buying benefits available, but many don’t even know it.
Kim Novak has worked with many veterans and active military personnel helping them to find a home in the Layton, Utah, area, where the Hill Air Force Base is located.
As an Army veteran herself, Novak has never had any other kind of loan than a VA loan.
“These loans are not harder to get like some people say. It’s not inflexible like other loans either,” she says. “But I tell my clients that it’s not just about the house. It’s about the community. Live where you are the happiest.”
But Novak, principal broker and owner of Novak Advantage Real Estate, has found that with all the home buyers she has worked with through the years, there are more misconceptions about the VA loans than any other type of mortgage.
“It is interesting that these misconceptions come from both the buyer and the seller side,” she says.
So, without the right information, people make mistakes and bad decisions.
Here are some of the misunderstandings made by military home buyers that can mess up their chances for getting a home as easily as possible:
Thinking It Is Their Forever Home
“No one stays in a house forever,” Novak says. She talks with veterans and active military personnel about their exit strategy before they even decide on a house.
If they tell her that they will be staying in the house past 10 years, she tells them that things will likely change, whether it’s children, grandchildren, a new job, family issue or anything else.
“So, I help them figure out what all that means and help them find the right home,” she says.
Not Working With A Real Estate Agent That Knows VA loans
Novak is certified as a Military Relocation Professional by the National Association of REALTORS. By working with a realtor who understands all the nuances of veterans’ benefits and the loan itself, the process will be much smoother.
Believing A VA Appraisal Is A Substitute For An Inspection
VA appraisals and inspections are two separate things, Novak says.
A VA appraisal is required for any VA mortgage, but people get confused because the Veteran’s Administration calls it the VA Appraisal Inspection.
“They need new terminology, because it’s confusing,” she says. The appraisal is for the protection of the lender, while the inspection is for the protection of the home buyer.
Not Understanding The VA Funding Fee
VA loans have some amazing features. Those with a VA mortgage don’t have to make a downpayment or pay mortgage insurance, and they get some of the lowest rates available.
But there are still costs associated with VA loans that some people don’t know about. A VA loan has an upfront funding fee which is usually rolled into the loan which increases monthly payments and the overall amount paid throughout the life of the loan.
The only time this fee is waived is if the veteran has a 10 percent or more disability rating. The fee is somewhat like FHA mortgage insurance, Novak says. It helps the VA loan program continue on helping other veterans.
Not Knowing You Might Pay Closing Costs
There seems to be a misconception that in these 100 percent VA loans, the seller pays the buyer’s closing costs. That is not a given anymore.
“The market is so competitive these days that when I talk with my VA buyers, I tell them about lender-paid closing costs that keeps them competitive with other offers. Their interest rate would be a little higher,” Novak says. Closing costs are usually 2 to 3 percent of the loan amount.
Not Knowing That You Can Get More Than One VA Loan
Veterans have a certain amount of entitlement from their military profile. Many think they can only be eligible for one VA for life, but they can actually be eligible for the loan multiple times.
In fact, veterans and active military personnel can even have two VA loans at the same time.
Not Realizing That Seniors Are Eligible
Novak is a certified senior real estate specialist, and she has come across many veterans and their spouses who didn’t realize they are still eligible for VA loans.
Just because they served in the 1960s or 70s doesn’t mean they can no longer can take advantage of the loans. “It’s neat to see them finally realize they are still eligible,” she says.
Not Comprehending That Your Home Is An Investment
When Novak sells a home to an active duty military person, she tries to emphasize to them that even if they are only going to be in their home three years before getting reassigned, they will still be building equity.
“As values are appreciating rapidly in many parts of the country and including Layton, new homeowners could build $10,000 to $20,000 in equity in two to three years,” she adds.
“But sometimes, they feel like that’s not a lot of money.” And many don’t understand that all the mortgage interest they have been paying is tax deductible, which also helps them with finances.