There are over 1.4 million active-duty military personnel in the United States – add to that the millions of veterans, reservists and National Guard members. Many will purchase homes this year and one of their best benefits is the Veterans Affairs (VA) home loan. Most active-duty service members can qualify for a VA loan in as little as 6 months. How can you help armed services personnel purchase a home?
The first thing you need to do before you help a military buyer is educate yourself. If you’ve been in the military, you’re going to have an advantage in trust and personal experience. But if you haven’t, take the time to understand the military lifestyle and the VA process.
For VA loans, know the appraisal Minimum Property Requirements (MPR). There are interesting nuances like full access (no easements), 75% residential property, etc. You can view these MPRs in the VA’s Compliance Inspector Guide. All appraisals must include the MPR form.
Educate your buyer
New military members may have heard of the VA loan, but not all understand the importance of this benefit. VA benefits, including the loan program, are lifetime. There’s no mortgage insurance, plus there’s no money down!
“The biggest and most important benefit for military is being able to purchase a home with no money down for their loan,” said Hampton Roads, Virginia real estate expert Doug Wolfe. “Most loans require that civilians have a 3.5 to 20 percent down payment when purchasing a home. Down payments are not required for VA loans.”
Another benefit for active-duty personnel is using the housing allowance to cover the mortgage. “This gives you equity in your property essentially for free,” said Wolfe.
The biggest and most important benefit for military is being able to purchase a home with no money down for their loan. — Doug Wolfe
Understand military buying needs
There are a number of factors an active-duty service member should consider before buying a home. As an agent, ask smart questions and really listen to their answers to determine if it’s a good idea for them to buy now. If they’re in a position to buy, listen to their needs to find the right kind of home:
- How long is your assignment? Some active-duty personnel could be moving in as little as 12 months. As a real estate professional, you should find out how long they’ll be in the area and honestly assess whether it’s wise to purchase within that timeframe. Reservists and National Guard members can stay put, so they have an easier time with a long-term purchase.
- Will you be deployed? Some personnel travel and get deployed for long periods of time. A single person or couple might prefer a low-maintenance condo than a house.
- Where are you stationed? There is no room for tardiness in the military – help your buyer find a home that’s nearby, within easy access of public transportation, or going the opposite way of traffic.
- What’s your family situation? Although the military member may be away from home, there could be family at home. If a young couple is thinking about having a family soon, don’t look at a tiny townhome. Look for a good neighborhood where the spouse and kids feel safe over long periods by themselves. It’s also ideal for the home to be near support (other military families, close to the commissary/exchange, etc.).
- What’s your budget? In an expensive market like San Francisco, income may be a problem for some service personnel looking to buy. Just because they can put $0 down doesn’t mean they can afford a home and all that comes with it. For others, it’s a wise move and a much-needed tax break.
- Are you prequalified? No one, civilian or military, should be looking for a home without a letter of prequalification from a lender. For the VA loan, they will need a VA-approved lender and a COE (Certificate of Eligibility); they can start the preapproval process without the certificate, but will need it before the loan application.
Some of these questions will dissuade military buyers and that’s OK. Word travels fast in the military community, so if your honest assessment saves someone from an unwise purchase, they will remember you positively and be likely to recommend you to someone who is in a good position to buy.
It’s also wise to tell your military buyers that when they sell, they have options. Agent commissions are negotiable. And one of the best ways to save thousands at the sale is to go with a flat fee, full service listing.
By Susha Roberts