Questions to ask your lender

Purchasing a house as a military or veteran family can be daunting, but it doesn’t have to be! Sure – finding that perfect home is exhausting. Debates over bathroom and bedroom sizes will always occur, but the mortgage part can actually be the easiest aspect if you start by asking the right questions.

When settling on a potential mortgage lender, start by choosing one that is familiar with working with military and veteran families. You are busy enough, and nobody has time to explain to them how to read an LES or why your spouse isn’t available to talk during normal business hours. Look for a Military Friendly Brand® or even a lender with a specific military lending department.

Once you’ve found a lender, it’s time to make a list of questions.

What type of mortgage should you get?

  • For many military and veteran families, a VA Home Loan is typically the way to go. It offers the attractive benefit of no money down and, thanks to the passage of The Blue Water Navy Vietnam Veterans Act of 2019, no loan limits. This loan benefit also comes with no requirement of private mortgage insurance (PMI) since the VA is guaranteeing the loan. If you choose this option, you’ll need your Certificate of Eligibility (COE). This will be necessary for any lender you choose.
  • Traditional mortgages are also a popular option. These require a down payment of 5% to 20% as well as a minimum FICO® credit score. The interest rate on these loans also tends to be slightly higher than the VA Home Loan but they tend to close a bit faster.
  • An Adjustable Rate Mortgage (ARM) is another option, but one that should be examined thoroughly before choosing. ARMs come with more requirements now but still pose a risk with fluctuating rates and payment amounts. This route will require deep research and an ability to absorb risks.

What will my monthly payment include?

  • Depending on the type of mortgage you select, your payment will look a little different. For those who are not required to pay for PMI, it is relatively simple; your payment will be the principal and interest on the loan. This is considered your mortgage payment, but it isn’t all you’ll be sending.
  • Home insurance is required and for the majority of the lenders you approach. You’ll need to escrow both this insurance and your yearly taxes. This is why it is important to properly calculate your budget for your home; it doesn’t just come down to your mortgage. Research housing insurance and yearly taxes for the area you are home searching in. This will help you estimate your true monthly costs.

Other important questions for lenders:

  1. Do they handle underwriting in-house? This means they will be doing all of the mortgage work themselves, instead of having a third party handle it.
  2. What does the closing process look like? Every lender and area does things differently. It is good to ask this question up-front so you are prepared for whatever the requirements are.
  3. What is their loan processing time? If your family is going through a permanent change of station (PCS), this is a very important question to ask. You have to be in certain places by certain times, which means you have less leeway to change closing dates. Be up-front with your lender about what your needs are.
  4. Will they sell your loan? It happens. It shouldn’t necessarily be scary if they say they will, but it may cause a little annoyance. Selling the loan just means the payments will be made to another company- nothing else will change.

While buying a home comes with a lot of responsibilities and headaches, it is also an incredibly joyful time. Having your own house is a heady and deeply freeing feeling when the military controls so many aspects of your lives. In purchasing a house, home can finally be wherever you are.

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