If you’re a veteran, reservist or active duty service member, it’s important to know that there are special benefits you may be eligible for when buying a home.
“Veterans and service members have earned the opportunity to become homeowners, and it’s crucial that they are well-informed about the benefits and options available to them,” says Greg Murray, military mortgage program manager at Wells Fargo, who is also a U.S. Navy veteran.
To help, Murray has identified the top four things to know when buying a home.
• There are special financial education resources designed for military personnel and veterans. Take advantage of these free online resources so you can be a savvier home shopper. Some banks offer courses on topics like banking basics and smart spending, also contains a comprehensive guide on home-buying.
• Before assuming you won’t qualify for a loan, talk to a lender. Be sure to tell the lender that you have served or are currently serving in the military. They can inform you about the options available to you, such as a Veteran’s Administration (VA) loan. A VA loan is a home loan guaranteed by the federal government, designed to help those who’ve served in the military obtain homeownership. They can sometimes be obtained with zero down payment. Gifts or grants can be used to help cover down payment and closing costs, subject to program requirements, and no mortgage insurance is required.
• A large portion of qualified buyers aren’t taking advantage of the low-to-no-down-payment mortgage options available through VA loans. Indeed, more than 21 million veterans and service members live in the U.S., however, over the past five years, a mere 6 percent of them bought a home using a VA home loan, according to the Department of Veterans Affairs. This may be due to the common myth that active duty service members, National Guard members and reservists are not eligible for VA loans (in fact, they may be eligible).
Many also are unaware that unmarried, surviving spouses of veterans who died as a result of service or service-related causes are also eligible.
• Individual banks, not the Department of Veterans Affairs, offer VA loans, allowing you to work with a lender who understands your needs and makes you feel comfortable.
Developing a relationship with this lender is also a good idea, as you may later choose to refinance through the VA Interest Rate Reduction Refinance Loan (IRRRL) program.
If homeownership seems daunting, remember that taking advantage of VA benefits can make it more financially and logistically viable.