Young military families use veteran loans to buy in hot real estate market
Eddie Valdivia and his wife Vanessa pose in front of their first home, which they bought in October 2020 with a VA loan.
Eddie Valdivia, 34, and his wife Vanessa, 36, a Red Cross worker, bought their first home last October, amid the pandemic.
It’s a three bedroom, three bathroom home on half an acre in Palmdale, California, about 90 minutes from Los Angeles. Because Eddie is a veteran who served in the Navy for eight years, the couple were able to secure a VA purchase loan, which allowed them to purchase the house without a down payment.
“It was a great thing,” said Valdivia, who also noted that the interest rates on VA loans – which are offered by private lenders and partially guaranteed against default by the Department of Veterans Affairs – were better. than the standards, and that forgoing a 20% deposit opened doors for the couple.
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This is just one example of young military families using their veterans’ benefits to buy a home, even in the searing housing market before, during and after the pandemic.
VA purchase loans for Gen Z veterans – typically ages 18 to 24 – have increased 123% year-over-year, according to new VA data analyzed by Veterans United. Millennials looking for VA purchase loans increased 16% over the year.
Additionally, millennial and millennial veteran loans accounted for 52% of all VA purchase loans made in the first half of 2021, up from 47% a year earlier, according to the analysis.
“The growth is here, and veterans are planting roots in communities across the country,” said Chris Birk, director of education at Veterans United, a lender for homebuyers.
A Veterans Loan is a big help
VA purchase loans are a benefit that has helped many eligible veterans, service members, and military spouses purchase or refinance homes. Those who get them do not have to deposit any money and are not required to purchase private mortgage insurance – a major help for many young buyers.
They also offer competitive rates compared to traditional loans. The average interest rate for a 30-year fixed rate VA loan is about 2.75%, according to Bankrate. For a traditional 30-year fixed rate mortgage for non-veterans, the average interest rate is around 3%, Bankrate said.
“It’s incredibly beneficial for the buyer,” said Birk.
Of course, the searing housing market has also made it more difficult for homebuyers to find homes, mainly due to a lack of inventory. In ultra-competitive conditions, some veterans using VA purchase loans have found additional difficulty in purchasing homes due to some misconceptions about loans.
“Not all home sellers are open to even just considering the possibility of receiving an offer of a VA loan,” Birk said, adding that in this case there is not much that a veteran can do. do to convince them otherwise.
“The common misconception is that VA loans take forever, that they are going to fall and that there will be valuation issues, and that is just not true anymore,” said Caitlin Turkovich, director of Union Home branch in Las Vegas Mortgage that works with seasoned home buyers.
What Should Military Home Buyers Expect?
There are a few things Turkovich recommends for veterans and active duty members looking to use their VA loan benefit.
The first is to find a lender who is experienced with VA loans and can help ensure that the processing goes smoothly and quickly. For example, Turkovich’s average time to close with a VA loan is 26 days, compared to 28 days with a traditional loan, she said.
She also said that in today’s market, buyers should be prepared to make multiple offers on homes before they get one, and know that they don’t have time to hesitate if they see a home that is missing. ‘they want to buy.
“There’s a line there that says, ‘If you have to sleep on it, you’re not going to sleep in it,’” she said.
Additionally, people using a VA loan may want to consider making a down payment if possible, as this will give a reduction in finance costs, possibly lower monthly payments, and could set the buyer apart from the competition. It is also possible in some states to write a so-called love letter to the seller to express your interest in a home.
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