Eddie Valdivia and his wife Vanessa pose in front of their first house, which they bought with the help of a VA loan in October 2020.
Eddie Valdivia (34) and his wife Vanessa (36), a Red Cross employee, bought their first house in the middle of the pandemic last October.
It’s a three bedroom, three bathroom home on half an acre in Palmdale, California about 90 minutes outside of Los Angeles. Because Eddie is a veteran who served eight years in the Navy, the couple were able to obtain a VA purchase loan that allowed them to buy the house with no down payment.
“That was a big deal,” said Valdivia, who also noted that VA loan rates – offered by private lenders and partially insured against default by the Department of Veterans Affairs – were better than standard rates, and that the option To forego a 20% deposit opened doors for the couple.
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This is just one example of young military families taking advantage of their veterans to buy homes before, during, and after the pandemic, even in the scorching housing market.
VA purchase credits for Generation Z veterans – typically ages 18 to 24 – rose 123% year over year, according to new VA data analyzed by Veterans United. Millennials seeking VA purchase loans were up 16% year over year.
Additionally, loans from Millennial and Gen Z veterans accounted for 52% of all VA purchase loans granted in the first half of 2021, up from 47% the previous year, the analysis found.
“The growth is there and veterans are taking root in communities across the country,” said Chris Birk, director of education at Veterans United, a homebuyer lender.
Veteran loan benefits of great help
VA purchase loans are a benefit that has helped many veterans, military personnel, and eligible military spouses buy or refinance homes. There is no need to invest or need to take out personal mortgage insurance for those who get them – a great help to many young home buyers.
They also offer competitive rates compared to traditional loans. The average rate on a 30 year VA fixed rate loan is around 2.75%, according to Bankrate. For a traditional 30-year non-veteran fixed-rate mortgage, the average interest rate is around 3%, Bankrate said.
“It’s incredibly beneficial to the buyer,” said Birk.
Of course, the blistering housing market has made it difficult for homebuyers to find homes too, mainly due to a lack of inventory. In super-competitive conditions, some veterans using VA purchase loans have added difficulty buying homes due to some misunderstandings about the loans.
“Not every home seller is willing to even consider the possibility of entertaining an offer from a VA loan,” said Birk, adding that in this case there is not much a veteran can do to convince them otherwise .
“The common misconception is that VA loans are going to last forever, and that they will default, and that there will be valuation issues, and that’s just not true anymore,” said Caitlin Turkovich, a Las Vegas-based branch manager of Union Home Mortgage who is experienced with Home buyers cooperate.
What Military Home Buyers Should Expect
There are a few things Turkovich recommends to veterans and active duty members looking to take advantage of their VA loan service.
The first is to find a lender who is experienced with VA loans and who can help make the process go smoothly and quickly. For example, Turkovich’s average completion time on a VA loan is 26 days, compared to 28 days on a traditional loan, she said.
She also said that in today’s marketplace, home buyers should be ready to make multiple bids on homes before receiving one, knowing that they have no time to hesitate when they see a home they want to buy.
“There’s a line out there that says, ‘If you have to sleep on it, you won’t sleep in it,'” she said.
Additionally, if possible, people using a VA loan may want to make a down payment as this offers a discount on financing fees and potentially lower monthly payments and could set the buyer apart from the competition. In some states, it is also possible to write a so-called love letter to the seller to show that you are interested in a home.
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