Veterans benefit greatly from Veteran Affairs (VA) when buying a home. One of the biggest challenges to homebuyers who are not veterans is paying the down payment and closing costs on a house, which can add up to thousands of dollars. Veterans don’t have to worry about it.
The No-No Mortgage
The first no of the No-No Mortgage is not having to pay a down payment on a home. The second no is not having to pay closing costs. Veterans can purchase a home without any out-of-pocket expense.
The problem is, the fees that are included in closing costs don’t just go away. Those fees are from services rendered for the sale of the home. People want to be paid for their work. This means the job of a Realtor is to help the homebuyer find a way to have those closing costs paid. Sometimes, the seller will pay for them as part of the contract. Other times, lenders will pay for them to get the homebuyer to pick them for the mortgage. A good Realtor is able to negotiate payment for the closing costs, so it doesn’t affect the chances of the buyer getting the house.
VA Funding Fee
Most veterans will read about the No-No Mortgage and think, “What’s the catch?” Yes, there is a catch. The VA has a funding fee. For first time buyers, the funding fee is 2.15% of the home’s sale price. For other buyers, it’s 3.3% of the home’s sale price.
Veterans do not have to pay this money in cash. The funding fee can be added to the mortgage so it’s included in the monthly mortgage payment.
Many people will think this isn’t much of a catch because they still don’t need cash on hand to buy a home. However, if people thought they were saving money with the No-No Mortgage, it may not be as much savings as they had anticipated.
How to Have the Best Experience with a VA Loan
Choose a Realtor who has experience with VA mortgages. This person will understand how to factor in the VA funding fee when looking for houses in a certain price range. The last thing anyone wants to happen is to have underwriting say you can’t buy the house because the funding fee puts you slightly over the approved VA loan amount.
An experienced Realtor can also work with sellers to get them to see that paying for closing costs is in their best interest to get their home sold. By removing conditions on the contract that do not cost as much as the closing fees, buyers end up getting the house without losing too much in the deal.
Veterans have sacrificed a lot for our country. The VA ensures veterans receive benefits to thank them for their service. As a veteran, take advantage of those benefits as much as possible. You deserve them.