e other day I sat in on a presentation regarding the requirements for a VA Loan. It dawned on me that the Air Force's Reduction in Force (RIF) is going to dramatically affect individuals, who were hoping to use the VA loan to purchase a home in the next year. The basic criteria that made this come to my attention is your enlistment/commitment period. Did you know that when you apply for a VA secured mortgage loan (as an active duty military member), you are required to provide evidence that you will remain in the military for at least one more year. The evidence required is typically a Proof of Service document which shows your commitment to the military including your projected date of separation. If that date is within the 12 months of applying for that mortgage you must submit a letter from your commander stating that you are eligble to re-up, and you must write a letter stating that is your intention. However, if you are not eligible to re-enlist, you will not qualify for the loan unless you can show steady future income. Individuals retiring can use their retirement pay, but those who are simply separating from the military will need to establish a "post-military" work history (usually 2 years worth). Now, that being said... what if you are on the RIF list for the board this fall? Come next January the military may be forcing you out... have you thought about how that may affect your dreams of homeownership? I have...
Here's the deal: If you are chosen by the board in November to separate by February, you may not qualify for a mortgage for at least 2 years, because you must show a work history as well as a future income (There are exceptions, such as obtaining employment in a similiar career fields, having large down payments, and your spouse's income). Once you separate from the military, you will be required to show at least 2 years of consistant post military work experience (same employer/similar work) . So essentially, even though you have held solid employment with the military, you will no longer qualify for the loan until you establish a post military work history.
I have spoke to several lenders on the matter to get their opinion on this unique situation, and they all have agreed. If you buy a home and close prior to the RIF Board meeting, you will still qualify for your mortgage. Essentially, until you are actually told you will be separating, your first date of separation will remain the same as what is listed on your Proof of Service document; and that is what the lender will look at. So if you plan to remain in the area of the base you are currently stationed at, it may be the time to consider purchasing a home, especially if you live on base. If you live on base, you will be required to move off when you separate; and if you haven't already purchased a home, you will have to rent until you meet the criteria to obtain financing. If you wait until you receive word that you are on the final RIF Board List, you won't qualify for the loan because you will not be able to show that you will be employed for the next 12 months.
If you eligible for the RIF you may want to evaluate your current position and future. If you want any more information on this matter, please feel free to email me and I will gladly send you whatever you need. If you think you want to buy a home, we can set up a Buyer Consultation (no cost) to see if the time is right for you!
Here is a good article on who will be affected by the Air Force Reduction in Force: http://www.stripes.com/news/air-force-wants-to-trim-5-750-people-by-2012-1.100306
Please Note: You will not lose your eligibilty for a VA loan, just won't meet the criteria to obtain it until you establish a post military work history.
Comments(0)