When people learn that I served in the military (8 years in the U.S. Navy), they often say to me, “Thank you for your service.” I always appreciate that, and when I see anyone in uniform in our area, I do the same. When I see an Army Reservist in uniform in my local Starbucks, I pay for their coffee. I think it’s a nice gesture of gratitude and respect toward someone who’s serving us, and I wish these kinds of gestures were more common today.
But there is another way to thank those who have served, or are on active duty now: be a part of their home buying process.
Here’s what I mean: in 1944, the Servicemen’s Readjustment Act was passed. You probably know it as the “GI Bill.” This important legislation provides a host of benefits for servicemen and women—including an amazing home loan program. VA loans are guaranteed by the federal government, so a veteran can buy a home with no down payment and no mortgage insurance. Interest rates for 30 year fixed rate loans are in the low 4% range today, qualifying is easy and loan amounts go up to—get this—a million dollars. And that home loan benefit never expires.
Is there a catch to this? As a matter of fact, there is. We have worked with many aspiring homeowners who are veterans. We have seen them make offer after offer, only to be rejected by sellers in the mistaken belief that a VA loan will somehow cost them money, will take too long, will require them to do major repairs to their properties and will generally be too much hassle to get involved with.
Frankly, this is sheer ignorance. While there are certain closing costs a veteran borrower is not allowed to pay (escrow fee, processing and underwriting are the biggest ones) those really don’t amount to a very big number—$2,000 or less. Although these “non-allowable closing costs” are typically paid by the seller, they can also be covered by a rebate from the lender.
As for the condition of the property, the VA just wants to be sure the veteran buyer is getting a fair deal and a structurally sound home. The seller will have to provide a termite clearance, and if there are obvious structural defects or construction that was done without a permit, those things will have to be fixed. It is really not that big a deal, in most cases.
If you are a Realtor, why should you work with a veteran? Apart from the fact that it’s the right thing to do, it can be an easier sale to make. Put yourself in that buyer’s shoes for a moment: you are going to buy a home possibly for no cash out of pocket and a payment less than the cost of renting the same home. How difficult are you going to be to work with?
If you are a seller considering an offer from a veteran, just keep in mind that you can sell your property for its fair market value, with a minimum of hassle and delay. Being open to VA buyers means that you will increase the size of your market. In 2009, there were nearly 22 million veterans in the U.S. and over 2 million in California.
Whichever role you might play, you can make a real difference in the life of a veteran family and help our struggling housing market in the process. Everyone wins.
And if you have the opportunity, springing for coffee would be nice, too.