VA Loans! Why we LOVE them!!

VA is one of the easiest programs to qualify for, as it should be! Active Duty service members and veterans sacrifice so much for our country, I love that there is this one small benefit they can take advantage of to make homeownership a reality! VA is one of my favorite programs, zero down payment required, no mortgage insurance and lower interest rates! Reach out anytime to get more specifics on if you would qualify for a VA home loan! 

Transcript

SPEAKER_01 0:00

Hello again. Thank you so much for joining us. This is Bed Bath and Banter, Arizona Real Estate Edition, and I'm Amy Batten with Waterstone Mortgage.

SPEAKER_00 0:08

And I'm Ryan Batten with West USA Realty and the Batten Home Group.

SPEAKER_01 0:12

Alright, so today we want to talk about one of our favorite type of minor, the VA. Veteran, but the VA Home Loan. It is one of the best programs that are on the that's on the market today. A lot of people kind of tout themselves as VA home loan experts. There is a lot of details to the VA product that we really do have to kind of become certified in it in order to offer our veterans all of the benefits that come with that program. And it's crazy to me when I talk to, let's say, young veterans that just, you know, just finished their required time in the military. They're actually just given like a really basic outline of all of the benefits that they get for serving in our military. Um, but they don't really know much about it.

SPEAKER_00 1:02

I think the biggest thing that I hear, especially for the folks that, you know, they maybe they were for four years, six years, eight years, uh, and they come out, is that it's a zero-down program. Like that seems to stick, and but that's about all that they seem to remember, right?

SPEAKER_01 1:16

Yes. Yeah. So a VA, one of my favorite products, um, it is a zero-down purchase loan. You can also use it for refinancing and for cashing out. So it's very versatile. Really, anything you need as a veteran uh to become or stay a homeowner, they offer it. Um the first thing I want to talk about is the disability piece of it. Uh, if you have 10% or more VA disability, you do not pay a funding fee. And that is huge. Um, that is a huge expression. So it starts out at uh 2.15% on your first-time use, then it goes up to like 3.3% if you've used it previously, if you do not have any VA disability. Um, and I think that the percentage starts at 10% and goes all the way up to 100. So as long as if you have any of that disability percentage, you automatically do not have a funding fee. That will save you thousands and thousands of dollars. Like essentially in the, you know, anywhere from six to nine thousand dollars on every transaction that you do.

SPEAKER_00 2:27

Yeah, you know, and it seems to me, at least, in most of my conversations with our clients who are veterans, the overwhelming majority of them have some level of disability.

SPEAKER_01 2:36

Well, of course. I mean, it's a tough life. Yeah.

SPEAKER_00 2:39

Yeah, no, it is. It's very so and and you know, I most loan officers should know this, but I would not at all be shocked if there were some loan officers that had no clue about that with regards to VA in the funding.

SPEAKER_01 2:52

If they don't do government loans or VA loans, then they probably wouldn't.

SPEAKER_00 2:55

Or their onesie twosies here and there. Yeah.

SPEAKER_01 2:57

Yeah. So um, so zero down. And again, if you have any disability at all, you have the option of not having a funding fee. Um, another thing is on VA, the interest rates are a little bit lower than they are on conventional loans. So you get a fantastic interest rate, um, zero down, and there is no monthly mortgage insurance. So for conventional, you have to put down 20% a down payment, um, excuse me, in order to avoid a uh mortgage insurance on, let's say, you know, a $200,000 loan uh purchase price, which I wish existed here. I'm just trying to keep the number simple. Um, that would be equivalent to like $40,000 down. For VA, you do not have it, regardless if you have a down payment or not, you don't have mortgage insurance. What that means is you can stretch your dollar even further. You know, you can qualify for more of a home because you don't have that extra expense in your payment.

SPEAKER_00 3:53

Yeah, and in we routinely see people paying $150 to $300 a month just in mortgage insurance.

SPEAKER_01 3:59

Oh, absolutely, yes.

SPEAKER_00 4:00

Yeah, so that's it. It is, that's a significant are you can you can take it either way. Like she said, you can maybe we can bump up our our price target, or maybe just stick with where you you feel like you want to be um and know that you're you're enjoying that additional savings in the process.

SPEAKER_01 4:16

So um, yes. And then uh did you also know that if you currently have a VA loan, you can utilize all of your VA eligibility to purchase another home. So it's called second-tier entitlement. You are able, let's say if you own a home right now and you use your VA benefits and you want to buy another home and you want to keep your home as a rental, you can absolutely do that. There is a calculation that we have to do to determine how much you'll qualify for with zero down. You don't have to do zero down. You can do a small percentage. Like I have a gentleman right now who he was a tiny bit above what his overall um eligibility would be because he owns a home and he's gonna keep it and rent it out. So he ended up having to come in with $5,000 and he was able to purchase a $600,000 home with $5,000 down.

SPEAKER_00 5:05

That's fantastic. Yeah. Let me ask you this. When it when they're factoring in VA eligibility, what all goes into that?

SPEAKER_01 5:11

Oh my goodness. So it's it's honestly it's a longer calculation. It's a certain amount. You have $36,000 in eligibility as a veteran uh through the VA for home loan purposes. It's not $36,000 in real numbers. There's like a whole calculation that we do to come up with your maximum purchase price. But ultimately, if you do not own a home, it equates to you could buy a million-dollar home with nothing down.

SPEAKER_00 5:35

Um does there rank factor into it at all? Yeah. Okay, so no, no issue there.

SPEAKER_01 5:40

No. Okay. If you served and you were honorably discharged and you have a DD 214, or even if you're in the if you're active in the military, you get the same program.

SPEAKER_00 5:50

The reason I ask is as you know, I I worked at USAA for five years, um, deal with our veterans on a daily basis, constantly, all the time. Um and with regards to certain things, either uh the amount that they paid for their auto insurance, their homeowners' insurance, um, the amount of life insurance that they could receive, all of that was based upon rank. Okay. Rank and pay, right? So the the officers could could get more, they'd get the better deals than they enlisted.

SPEAKER_01 6:18

So yeah, nope. That's not the case for VA home loans. Nope. Um, but I'm super happy that they do have that for you know other financial services. Yeah. So um, so just to recap, uh zero down, you get great interest rates, no monthly mortgage insurance. You could possibly not have a funding fee. Um, and that goes directly to the VA program to fund it. So that doesn't, that's not a lender cost, that is specifically a loan program cost. Um, and you could potentially have more than one VA loan at a time and still be able to purchase another home. So it's it's pretty awesome. Um, let's talk really quickly about being able to qualify for a VA home loan. Okay. So VA itself does not have a minimum credit score requirement. Um, the lending institutions that offer the VA financing, they do. So, you know, VA will um, you know, essentially, you could potentially qualify for a with a 500 credit score. Um, good luck finding a lender that will give you a loan with that credit score, but the VA loan product does not restrict you. Uh for our purposes, a minimum credit score is 580, which I think is very good. It's it's, you know, most people are over 580. Um, and it the one of my favorite uh aspects of it is allows you to go up to a really high debt-to-income ratio. So for conventional, um, that's all of your debt against your income. Okay. And we come up with a ratio of kind of your affordability. Conventional does not allow you to go above 50%. So your gross income, 50% for your mortgage payment and all of your debt. Conventional, I'm sorry, FHA allows you to go to like 55% in most cases. VA, I've had ones approved at 70.

SPEAKER_00 8:01

That's wild.

SPEAKER_01 8:02

Yeah. Now I don't recommend it because obviously you want to stay within your means and you want to be able to afford your home. But um most uh frequently we see you're able to qualify for up to a 60% debt-to-income ratio. So that means if you make $10,000 a month gross, all of your debt plus your mortgage payment can be about $6,000 of your income.

SPEAKER_00 8:25

So we have the It's really aggressive. Okay. Yeah, that's another positive for sure. Uh especially for folks who are uh potentially just kind of starting out in life and they, you know, they uh maybe they have some debt that they've got to address. You've got student loans, who knows, what other statements are.

SPEAKER_01 8:41

Or they know that their income's going to be increasing. Right.

SPEAKER_00 8:44

Yes, yeah. So that that that's definitely a good benefit. Now, from my perspective on the real estate side, so what I have found over the last 20 plus years is if I am helping out a VA client and I submit an offer on their behalf, especially in a, let's say, a multiple offer situation where there's additional offers from other parties in on this home as well, um, we have those conversations with the listing agent, tell them as much as we can without giving away state secrets about our client. Um and I can't tell you how many times I've talked to a listing agent and they've come back to me and said, hey, so our seller, all the offers are pretty similar, right? There's not a lot a lot of separation there. But you know, our seller would prefer to have a veteran buy the house versus just Joe Public, right? If you know a general civilian or or what have you. Um so it, you know, and it's it honestly, it feels really good. It feels nice to hear them say that. There's a a level of respect for those individuals who have served, um who've chosen to do that. Um it's a it honestly, I don't think you guys get enough benefits.

SPEAKER_01 9:52

To be honest with you. With all the sacrifices, absolutely.

SPEAKER_00 9:54

Yeah. Um, you know, it's interesting. Uh when you think about saying VA, granted, being in the field that we're in, our minds naturally shift to the loan, right? That they can get. Um but there's a lot of things when you hear VA that a lot of people they cringe, like going, they call it going to the VA, right? Like for any medical issues, that kind of stuff. Um I I know there's been a lot of work over the last eight to ten years to try to really improve that, but man, they I I wish they would get that figured out. Like seriously. I mean, these people they go and they put their lives on the line, right? They end up having uh significant injuries that impact them for the rest of their lives, and then they gotta fight tooth and nail to be able to get benefits. Yeah.

SPEAKER_01 10:38

I agree with you. Um I I mean, obviously all of our parents, uh my mom and dad and his dad served in the the military, and I'm so proud. Um, but I do think that it's lacking a lot of uh a lot of con service connected benefits after they're out.

SPEAKER_00 10:54

Aaron Powell You know, it's interesting, and we're gonna go down a little bit of a rabbit hole, and I apologize, but I've talked with several of my my uh my buddies, um some who have served, some who've not, but uh there's been quite a bit of uh medical, uh I guess testing for a lack of a better way to describe it, for uh our veterans are coming back with PTSD, like severe PTSD. So uh a lot of what has been done in the past, uh, you know, outside of just therapy, but you know, giving uh mental health drugs to them uh really hasn't solved the problem. And you have, you know, it's a it's a real crisis. You have veterans uh committing suicide on a daily basis. Um but there's been quite a bit of studies where in more recent years they have been using, believe it or not, uh psychedelics, right? Like mushrooms, um uh ketamine and the like to try like in in microdoses to try to help mitigate some of the effects of PTSD. And what they're finding, and I think it's extremely exciting, but what they're finding is that they are eliminating, not like making it a little better, eliminating PTSD in like 80 plus percent of people.

SPEAKER_01 12:10

Wow.

SPEAKER_00 12:10

Right? And and it doesn't come back, they don't have uh reoccurrences or episodes again. And that's highly encouraging. I think that's super exciting because I think most of us in our lives know someone who struggles, who is a veteran, who's gone through that kind of stuff. Yes. Uh and you'd give anything to to take that pain away for them.

SPEAKER_01 12:33

So well, not real estate related, but Ryan is my uh knows a lot about a lot of things. And so thank you for the colour.

SPEAKER_00 12:41

A little bit about a lot of things. I don't know.

SPEAKER_01 12:43

I think you know a lot about a lot of things. You're my weird encyclopedia. Um, but that is very fascinating. And and honestly, when I mean, I guess we can tie it into housing because when they get their um, you know, personal stuff situated, it puts them on a journey to want all these other things. On a better track, including being a homeowner. So I guess it can be connected. There.

SPEAKER_00 13:03

I just go so just give your local letter and some mushrooms, right? And then it'll clear their mind, they'll be great.

SPEAKER_01 13:09

Some mushrooms don't give anybody. Don't do that. We don't know enough. That's bad advice. Um, but like Ryan was saying, um, with uh a lot of the real estate transactions, um, it is so wonderful. We love representing all of our clients, but it does seem to be a little bit easier with our veterans. Like people want to make their lives better. People want to work with them and want to give them the opportunities, um, you know, as a thank you for being heroes. And I I I get really excited when we have a veteran buyer.

SPEAKER_00 13:40

Yeah.

SPEAKER_01 13:40

No, I I I feel like we can definitely help them quite a bit.

SPEAKER_00 13:44

You know, it's funny. You know, I think it's a good thing. The only, only negative thing that we ever hear when we're helping out a veteran and they're they're using a VA loan is listing agents, they have it in their brains that these VA appraisals are just gonna be super stringent and super crazy, and they're gonna have to jump through additional hoops. End of the day, the program wants to make sure that if they're lending money to the veteran to be able to buy a home, that this veteran's not gonna have any significant or major expenses that they're gonna be walking into right away. It's already expensive to buy a home. Uh so I've got no problem with it. I think it's great. Like if there's a couple of things, you know, simple stuff really. Honestly, a lot of times it could be like chip paint could be an issue. Um, you know, if uh say on the patio, uh you got two concrete pads that butt up against each other and one starts to kind of raise a little bit, they can consider that a trip hazard. You know, there's there's there's a bunch of different things that they're looking out for. Um, but but nonetheless, they they're looking to protect these people who have volunteered to protect us. Agreed. Right? So I think it's a very minor issue, but that's the only, honestly, the only thing I can think of.

SPEAKER_01 14:58

Well, and it's really just ignorance. Um, you know, and it's mostly the uh the older agents who haven't done a VA transaction in a really long time. Because back in the day, you know, 10 plus years ago, it wasn't that the loan was more difficult. There were more costs that the sellers had to pick up on the buyer's behalf on a VA loan. That doesn't exist anymore. So, you know, once we educate them and tell them, hey, you know, this this doesn't apply any longer and and this is what's expected of the seller, um, it usually becomes a non-issue. But I'm gonna go back to your appraisal. Um, so government loans, FHA and VA loans, um, because there is very minimal financial investment in most cases to get into those home loan programs, like Ryan said, that we want to make sure that the home has no health or safety issues or livability issues walking into it. Okay, so they want to make sure that the home is safe, it's safe for your children. Um, you know, that there's no blaring issues that could be, like he said, a significant financial concern in the future. Um, it always ends up being minimal things. Like, um, gosh, I'm trying to think, like you said, the chipping appealing paint is a big one, especially here in Arizona. Um, because even though lead-based paint probably doesn't exist a whole lot anymore, because anything that was built in the 70s or earlier has been repainted many times. Sure. Um, but it was but lead paint. They don't want chips to be able to fall on the ground and your little baby crawl up, eat the paint chips, and have brain damage. Um, but they also, we have, you know, obviously an issue with termites here. So we have to scrape and repaint, like usually it's the fascia and the eaves on the homes because of the sun damage, but you know, that invites termites. So it's, you know, paint like scraping it and resealing it, you know, kind of helps eliminate that possibility. All of it is for the buyer's benefit. It really is. And we don't really see a lot of massive repair requests on V8s. Like they just have to be livable. There it can't be missing fixtures, it can't be missing flooring. Um, we don't care if it's pretty.

SPEAKER_00 17:00

The AC has to be working.

SPEAKER_01 17:01

Yes, AC has to be working, the utilities have to be on. Um, it's just normal stuff. So I don't, um, it's it's the more you educate yourself on the product itself, the more you see that all of these myths that people believed, you know, they're just not true. VA and FHA are my two favorite programs. I love my conventional loans too, but I really love helping the person who they didn't think they could do it, or they didn't think they could buy a house, or they didn't have anybody actually stop and listen to them and help them accomplish their goals because they were just a number. Like that's actually my favorite client.

SPEAKER_00 17:39

Yeah, well, I I honestly I think you've made an entire career about out of just getting to know the people, having an actual relationship with them. I I gotta be honest, uh we have dealt with hundreds and hundreds and hundreds and hundreds, and probably thin into thousands of clients. Oh, sure, yeah. Um, and almost to a to a person, they're like, Amy's amazing, she's great, she cares, you can sense it, you can feel it, right? Like most most people in any line of work, you can't really sense that from. But all of your clients say that. And they say it enough of them say it on such a routine basis that it absolutely has to be true. I mean, I obviously I I'm lucky I get to see it in person. Um but I think that's who that's a type of person most people would love to do business with, where they you have that sense that, hey, they really are in my corner, they really are fighting for me, and they're trying to get me the best possible deal that they can. People can feel that, right? They can sense that, they appreciate that. Uh, people can also feel the opposite. They can feel when, like you said, it's very transactional, they're just a number, right? They're just the the next piece of the puzzle, the next paycheck, what have you. Uh, they can sense that as well. They can sense the desperation from a uh a professional, right?

SPEAKER_01 19:04

Um yeah, I I actually I I agree with that completely. Like I always tell people like, don't use the person who needs this, he needs you to buy a home more than you need to buy a home. You know, that is the scariest position to be in because they'll talk you into anything. And if you don't know better, you're gonna fall for it.

SPEAKER_00 19:21

Yeah, and and on my end, I mean, I I can't tell I mean how many times I have told clients, look, I wouldn't buy this home. I I I try to impress upon them that when we're out looking at homes, I am viewing the homes as if it were me that was going to buy it. And if I wouldn't allow myself to make the purchase, I can't in good conscience allow my clients to do so. Where that's not always the case in this industry for sure. A lot of people, I mean, you know, everybody's got bills to pay and they will encourage you or, you know, kind of nudge you in a direction uh because the at the end of the day, they they they want to be able to pay the bills. They want to be able to eat food, they want to have a roof over their head. Um, and you, you know, you don't necessarily, I don't think, want to work with someone who's in that position personally.

SPEAKER_01 20:09

I agree. I wouldn't. Um, but I also don't want to work with someone who does so much that they don't have time for me. I mean, it really just depends on the side. Yeah, it's yeah, it's hard. It's finding your sweet spot. Um, but yeah, so our VA, there are so many opportunities for you. If you didn't know anything about this topic before, I hope you learned a little bit. Um, and just know, you know, we would absolutely love to help you answer any questions that you have. Um there's there's just so much opportunity out there right now for buyers that if you're at all in the market, if you are wanting to see what your options are, if you're one of those that says, I'll never be able to own a home, get expert advice before you decide that, please.

SPEAKER_00 20:49

Yeah, so you guys can go to keeping it real estate with Amy B. Yes.com. Yes. Uh you can get up on her calendar. Honestly, I would recommend that's where you start. We really want to make sure that from the financial perspective, this is something that can happen. Right. And Amy will have that conversation with you, and she will tell you exactly what you can and can't do. And then I get to do all the fun stuff after that. When she gives us her blessing, she waves her little magic wand and says, Yes, you can buy. And then I get to go out and look at all the cool homes with you and ultimately really dial in, find out what it is that you you you really like, that you really hate. Um, and we end up getting you a home where you walk in, you have that aha moment. And you know, everybody is super thrilled, super excited. They're shaking hands, kissing babies.

SPEAKER_01 21:33

It's a great uh we won't kiss your baby, don't worry.

SPEAKER_00 21:36

But I am a hugger.

SPEAKER_01 21:37

Um, again, you can find us online anytime at keeping at realistate with amb.com. Thank you so much for letting us have your attention for the last 20 or so minutes. And, you know, if you're a veteran, thank you so much for your service and your sacrifice from all of us.