When you’re working with a current member of the military or a military veteran, you have a great opportunity to support someone who has worked hard to serve their country. There are nearly 21 million veterans in the United States, yet many of them are not aware of all of the benefits for which they qualify. From financing to home insurance rates, you can help make sure your military buyers are getting the best deal on their dream homes.
Take advantage of VA loans
Asking every new client if they served in the military can help a veteran realize they have access to VA loans, arguably the most powerful loan product on the market, said Chris Birk, director of education at Veterans United Home Loans in Columbia, Mo. Offered through traditional lenders like banks and credit unions, a portion of VA loans are guaranteed by the VA or the Department of Veterans Affairs – freeing up lenders to offer better terms, such as no down payment or private mortgage insurance required.
Even veterans who are aware of their potential eligibility for a VA loan may not understand how the loans work or assume they won’t qualify based on the current state of their finances. Most lenders require a minimum credit score of 620 just to qualify. VA lenders may be more lenient on borrowers with a foreclosure or bankruptcy in their past than other lenders, potentially qualifying borrowers as soon as two years or even 12 months after one of these events.
There are no specific income limits for a VA loan, but in most cases borrowers must have a maximum debt-to-income ratio of 41%. This means that the minimum payment on all recurring debt is at or less than 41% of your gross monthly income. VA loan borrowers also need to meet a “residual income” requirement, which refers to the cash available after all monthly bills are paid. The residual income requirement varies by state and family size.
Some borrowers and real estate agents think VA loans take longer to close or have more complicated appraisal requirements, but they typically close in about the same time as other loans. According to data from a recent Ellie Mae report, VA loans took an average of 45 days to close compared to an average of 42 days for all loan types in May 2019.
Another potential misconception about VA loans is that they have a stricter appraisal process. While VA loans do require a property condition inspection, that doesn’t automatically rule out a fixer-upper. In some cases, a borrower can pay for repairs and then use VA financing.
However, even with all their benefits, VA loans shouldn’t necessarily be the default choice for all military buyers. “Veterans with great credit and solid assets would want to compare conventional and VA loans and evaluate the best fit in light of costs, fees, interest rates and more,” said Birk. This is especially true for first-time buyers who may be eligible for homebuyer programs from lenders and local governments.
Help identify military discounts
“Veteran and military homebuyers can inquire about military discounts with all sorts of providers, including those involved with the loan process, like a home inspection firm,” said Birk. “There are no guarantees, but it doesn’t hurt to ask.”
As a real estate agent, you can provide excellent service by staying up-to-date on discounts that may be offered by homeowners insurance providers (for both active duty and veterans!), moving companies, furniture companies, landscape services and by home improvement stores or contractors. You may even want to recommend a free membership with Military.com so buyers can take advantage of the discount resources available on the site.
Be prepared for quick sales and purchases
If you’re working with someone on active duty in an area where the government doesn’t provide housing, there will be what’s called Basic Allowance for Housing (BAH), a monthly allowance paid to eligible service members.
Members of the military frequently move for their service, so as an agent you may want to be prepared to offer guidance if they’re buying in an area where they haven’t lived before. You can provide information about a variety of housing options within commuting distance of their base to expand their choices beyond those areas immediately adjacent to the base.
Information about area amenities such as parks and athletic fields, school systems, places to shop, places to worship and transportation options can be extremely valuable for military families relocating to your area.
Also, make sure the buyers know they can use their BAH to qualify for a VA loan or mortgage and not just for rent payments.
Accommodate special requests
Some veterans may need a home with special features to accommodate disabilities, while others need nearby support systems for physical therapy or for mental health issues like post traumatic stress disorder (PTSD). The more you know about programs and facilities that can help veterans, the more valuable you are to them.
Another important consideration, if you’re working with active duty members of the military, is a support system for their families in case they’re deployed. You can search for information about programs in your area through Military OneSource, including counseling programs and moving assistance.