Has anyone used the VA Loan? Have any advice?

Hey!

Life is finally starting to look good for me. I graduated college, landed a great "intern" federal position and I will likely be appointed to a permanent position next May. I love the area I am working in and I will be ready to begin house shopping as soon as I know I will have the job. Worse case scenario, I will have a permanent job in a different state or city and I will need another year to decide if I am comfortable calling that place home for the next 5-10 years.

I ran a credit report before leaving college (may 2017) and I was at 768. I currently make just over 40k. I will be at 50k if I get the permanent position and 60k after a year working there. I have decent savings and I could potentially put money down to go the more conventional route.

For those of you who have used the VA loan, how was it? Is there anything I can do in the leading months to streamline the process? Any good books to read for a first time home owner? Any advice is appreciated. I am hoping for a small 1-2 bedroom starter home in the range of 100-150k. The overall future goal is to purchase 70-100 acres and build on that at a later time. This smaller home would then be sold or rented out.

 

First off, the VA loan is not a loan per say. You still have to find a lender a qualify for a loan through that lender as well as the interest rate so shop around. The VA just cosigns on the loan in basic terms.

Other than that there is not much to it. Using the program will get you a 30 year fixed rate with a pretty low rate compared to what is out there. If you can put money down on top of that then absolutely do it.

 

Yea man do it! I still really don't know how it all works but I have a house now. Boom!

 

I've bought two houses with a VA loan. It's pretty simple. Just tell the bank you want to use that you are using the VA loan. They will have a person or department that handles all the VA loans and will set you up with everything you need. Don't sweat it.

 

There are banks/lenders that specialize in VA loans, or some lenders are happy to get them due to the federal backing. Shop around, but don't let any of them run your credit to "see what your rate is". That's crap and will cause unnecessary credit inquiries at a time you don't need them.

In the meantime, don't get any new credit cards or loans. Start researching the area you want to live in. I gaurantee it will cost more than you expect to live in the house. Research utility costs, as some districts in close proximity might have different providers with different costs.

Don't be afraid of a fixer upper. Real estate is all about the location. Focus on finding the right neighborhood first, then find a house. 5-10 years, you might want to look at the local schools too. You might have some kids by then. There is a lot more but these are some things to think about.

 

I used mine to buy a foreclosure, which is normally pretty difficult as the VA is fairly strict on what they'll allow. It was a really easy process, borrowed $126,000 at 3.875% and 3 years later we are selling at $160,000. We went conventional with our second home because the VS loan was/Is still open and apparently nobody involved was aware that you can have multiple VA loans open as long as you don't exceed the cap. Both our loans were well under the $400k+ max. It's exciting and scary at the same time, but if you find the right house and get a good deal, you will be happy and could sell for a nice profit when the time comes. Also, if you live in the home for 2 years and sell for under $250k ($500k if married filing joint) you can avoid those pesky capital gains taxes.

 

Not the sale price, but the net profit is tax free for first $250/$500k for single/married. But good item to point out.

 

The VA will not pay your closing costs

 

I've used the VA loan, and it was actually pretty simple. I didn't pay any money down, which was nice, but of course you can if you want to. The house did have to be approved by a VA inspector, so nothing that's falling apart that you might want to renovate. Other than that, it's just like buying a house normally! Good luck, and congratulations!

 

Go ahead and get your certificate of eligibility started. It's basically just saying you qualify for it. I don't currently have a disability rating and was pretty shocked when we bought our SECOND house that the VA tacked on a 3% fee. Wasn't aware that they did that. They are pretty picky during their inspection and will put the brakes on if they find something, there are not a ton of VA home inspectors so if they have to come back it could ad a week or two to the process. I had to add a stair railing to the front porch and they luckily let me send them a picture of it. Be flexible and understand that VA or not it's a long and aggravating process. Home inspection... Hire your own guy and use him as a second opinion. It's worth it.

 

Also, you will be buying without contingency for the most part. Use that to your advantage. Haggle and if you find a issue have them HIRE a contractor to fix it. If you don't feel like your getting a square deal, walk. People make the mistake of falling in love with homes and putting their budget on the back burner. Shop around and don't get hasty.

 

Good advice in this thread, but some misinformation too.

The loan will allow for a zero down to a specific amount based on zip code, typically its $417k with a few exceptions nation wide. Beyond that it's a "jumbo loan" but VA will still sign off.

You will pay the 3% funding fees on top of your loan, and it's typically tacked on as additional points in your APR, so your loan won't look 'as good' on paper. This fee is waived if you have a service connected disability awarded prior to your financing date.... so get that claim for tinnitus in now because it can be refunded to a back date.

Closing costs are yours to negotiate and sometimes you can roll them into the loan. Our first house bought we walked out off closing with a check in hand.

After 6mo of payments you can EERL and get your apr dropped down. So don't worry about that upfront APR if you are rolling everything into the loan.

You will need a "certificate of eligibility" for the loan provider, log into ebenifits and get that started, RLC might be backed up.

The loan process is not very different than a normal one, and as some said, tell the bank you have chosen you are doing a VA zero down. The bank will have people that know what is needed. We just went with USAA because easy.

The inspections must be done by VA certified inspectors and they are almost as nit pickey as HRA inspections, so that is good for you.

After that, enjoy the rollercoaster of hell that is buying a home!

On edit:
make sure you do your retirement buy back for your AD time. 9yrs 10mo cost me $6001.10 and I get to retire at age 56

 

Here is a chart showing the different funding fees.

 

(Off Track Alert)

Buy back your time as soon as your permanent. Do alot of thinking on your future before you roll your mil TSP into your civilian one. Your military TSP can chill forever but your civilian one has to be moved to another account when you leave federal service. If you plan on staying federal roll it into your civilian account. Everytime you get a step or pay increase up your TSP by that percentage. Look into FERS and understand that you need to set yourself up for retirement. I manage the hell out of my TSP and always will. I work with guys that only contribute 3-5%... Don't be like them. What you do now will be the difference between drinking Milwaukees Best or Heineken when you retire.

 

I can't contribute my pay raises, and I have only got one step increase to date.

Gs5 10mo
Gs7 12mo
Gs9 12mo
Gs10s1 12mo
Gs10s2 2mo
Gs11s2 4mo and counting.

But I am withholding 10% at this point.

Do you focus your tsp on a given fund for long term, or do you move your money around constantly?

 

At the moment I've got 50% in the C fund, 40% in the S fund and 10% in the G fund. My PIP for the last 12 months is currently at 13.56%. Im no stock broker (if I was I wouldn't be working for the DOD) but I keep an eye on a couple investment pages and move my money around from C,S and I. I've took some hits with the international fund but had some or my best returns as well.

 

A couple of pieces of advice:

1. Shop around. Don't just shop for rates, shop for closing dates, costs, etc. Get them in writing. Most lenders will match a written quote. Mine matched Navy Federal and was able to close faster. Depending on your market, the seller could take a lower offer due to a faster close. My mortgage broker closed in 27 days with VA. USAA and Navy Federal Credit Union estimated 40-45 days. I had to be under 30 for the deal to close. Cash buyers will crush your VA offer unless they have a soft spot for veterans.
2. Once you find your lender of choice, get don't get "pre-qualified" or "pre-approved". Start the underwriting process. Tell the lender you want to submit ALL of the paperwork and begin underwriting your loan. This will help expedite the closing process and will GUARANTEE you have lending available and the amount at your disposal. It's good for 90 days. If they won't begin underwriting without submitting an offer first, find a new lender. The last thing you want to do is walk in with a pre-approval and not be able to close fast enough or have the lender decide they don't want to underwrite your loan. Then you're screwed.
3. There's a VA funding fee. You're basically paying for a lower interest rate and zero down payment. It will get rolled into the loan, so don't worry about it. But keep a decent amount of cash on hand to pay for stuff like closing costs, wire fees, and general bs. Also, be ready to have earnest money on hand. A non-refundable deposit on your offer that shows you are serious.

 

Used VA loan to buy my current house. Used USAA, it was smooth and they were very helpful.

 

I may have mixed up closing costs and down payment, it's been a few years. Either way I deleted my misinformation.

 

As an active duty soldier and a licensed Realtor, VA loans are good if you have limited funds. You would be amazed at the number of people who are upside down on their homes after getting one because they had no down payment and financed the origination fees. Best advice for buyers, interview a couple of realtors and find one you trust to find what you are looking for. Also look at other loans. NFCU has a veterans choice loan where you pay minimal origination fees and no PMI. That right there is a huge savings especially if you don't have the 20% equity into the house. VA loans do serve a purpose, but there are better options out there if you have a down payment. Just my 2 cents.