Making the decision to sign on the dotted line for a mortgage can be daunting. For many military and veteran families, it is the biggest purchase they will make in their lifetimes. Despite this weighty decision, it is also one of the best feelings!
Many families are pleasantly surprised when their VA home loan process is nothing like the process of buying a car. It can be smooth, issue-free, and the lender does what they say they will. The home lender you choose has a huge part in making the process seamless but knowing what the process looks like also takes the fear away. Here are some basic Q&As for home loans.
Traditional or VA Home Loan?
The traditional home loan is the most common home loan, which is why it’s called ‘traditional. Depending on the lender and credit score, there is a down payment requirement; sometimes private mortgage insurance may be required as well. The interest rate is fixed - nothing sneaky or confusing here.
A few years ago, the difficulty in choosing between a traditional or VA loan was because many military and veteran families waited until retirement to utilize their VA benefit, since the borrowing was capped at $500,000 and had very specific criteria on borrowing more than once. Since the passage of the Blue Water Navy Vietnam Veterans Act in 2019, all of that has changed.
Now, choosing between the two comes down to personal preference. As of today, the interest rates for VA home loans are a little lower and costs are lower as well. Do your research and pick the option that works best for you and your family.
How much will your monthly payment be?
It all depends on the following factors:
- Purchase price of your new home
- Annual interest rate
- The mortgage length terms
- Down payment
- Escrow requirements based upon taxes and insurance, which can vary from property to property
There are so many lenders out there- how do you choose?
Talk with other military and veteran families in the area to get recommendations. They’ve gone through the process and will tell you the good, the bad, and the ugly. Look for lenders like Caliber Home Loans, who have the Military Friendly Brand® and an internal educational training program that provides team members an opportunity to earn the Military Veteran Lending Professional designation. This stamp of approval will give you a little extra piece of mind.
What will make my mortgage lending experience smooth?
This varies from person to person, depending on expectations. Typically, you should look for the following:
- Excellent customer service
- Sticking to the schedule. This is vital, especially if you are in the middle of a PCS!
- Knowledgeable and able to answer any questions that arise in a timely manner.
How much should you take out on a home loan?
- If you are an active-duty military family, ensure that your mortgage payment is at least $400 under your Basic Allowance for Housing (BAH). This allows the remainder to go towards your utilities. In the event that you are a single income household at any point, this also provides some financial cushion.
- Make sure you factor in what your escrow payment will be each month on top of the home loan cost. This is a cost many people forget about when they are house hunting.
- Less is more in this case. As military and veteran families, our lives can shift at any time. Ensuring that you aren’t in a home that’s too expensive to maintain or sell if need be is important. Your home is your sanctuary and should be what you love, but also what you are able to handle.
As you take on your home purchase, soak in the excitement of the moment. Owning your own home is an experience like no other. In a world where everything shifts to the will of the military, it’s a beautiful feeling having something that’s just yours to do whatever you want with. Happy home buying!
If you are a servicemember on active duty, prior to seeking a refinance for your existing mortgage loan, please consult with your legal advisor regarding the loss of any benefits you are entitled to under the Servicemembers Civil Relief Act or applicable state law.