Karen Lawley's Blog
You’ve been a renter for a long time because you knew you had wanderlust and might pick up and move at the end of your lease. Now you've stayed in the same place for a couple of years. You've put down roots and built relationships. You have a sense of community. But are you ready to buy?
Buying a home feels like a big commitment, and it is, so it should! You may not be choosing your forever home just yet, but no matter if it's a starter home or the one you want to raise a family in, buying a home locks you into the community, to a mortgage payment, and to the structure.
Learn all you can
When you rent, you only have your rent and a few utilities to factor into your budget. With a home, you'll have your principle and interest on your mortgage. You'll also have property taxes and insurance. And, depending on your underwriting situation, you may have PMI (private mortgage insurance), too!
Practice making payments
Use one of the many online mortgage calculators to determine your potential principal and interest. Then, check out the county taxes for where you want to buy—some online calculators even have a place to enter this as well as PMI. Add in an average insurance premium for your area. Now that you more closely have an idea of what your monthly payments will be. If it is higher than your current rent, start setting aside the difference now. You need to know that you can make the payment before you get into the house.
Factor in maintenance
The area buyers are most surprised about is the cost of maintenance. The A/C goes down, oops $4000. The roof leaks, that’s another $2500. Plumbing backs up and ruins the carpet? Now you have to pay for both plumbing and flooring. Insisting on a home warranty (that the seller provides) and mitigate some of these costs in the early years, but ongoing they are all yours, baby!
You may be planning to do your own and will have the one-time expense of equipment, but if not, you'll need to add in extra for regular landscaping. If you have a pool, you have to figure extra for pool care.
Since you won’t have a landlord to call, you’ll need to factor in pest control for bugs and rodents.
Ownership is a beautiful thing, but being prepared is more beautiful. Ask your real estate agent about classes or seminars on home ownership that you can participate in to adequately prepare.
There are a number of programs, government-sponsored and otherwise, that are designed to help aspiring homeowners find and get approved for a mortgage that works for them.
Among these are first-time homeowner loans insured by the Housing and Urban Development Department, mortgages and loans insured by the USDA designed to help people living in urban and rural areas, and VA loans, sponsored by the U.S. Department of Veterans Affairs.
In today’s post, I’m going to give you a basic rundown of VA loans, who is eligible for them, and how to apply for one. That way you’ll feel confident knowing you’re getting the best possible deal on your home mortgage.
What is a VA Loan?
VA loans can provide soon-to-be homeowners who have served their country with low-interest rates and no private mortgage insurance (PMI).
If you’re hoping to buy a home soon and don’t have at least a 20% down payment, you typically have to take out private mortgage insurance. This means paying an extra insurance bill on top of your monthly mortgage payments. The downside of PMI is that it never turns into equity that you can then use when you decide to move again or sell your home.
Loans that are guaranteed by the VA don’t require PMI because the bank knows your loan is a safer investment than if it wasn’t guaranteed
VA loans may also help you secure a lower interest rate, or give you some negotiating power when it comes to discussing your interest rate.
Finally, VA loans set limits on the number of closing costs you can pay in your mortgage. And, if you’ve ever bought a home before, you’ll know how quickly closing costs can add up.
Who is eligible?
There are some common misconceptions about who can apply for a VA loan? So, we’ll cover all the bases of eligibility.
If you meet one of the following criteria, you may be eligible for a VA loan:
You’ve served 90 consecutive days during wartime
You’ve served 181 days during peacetime
You’ve served six or more years in the Reserves or National Guard
Your spouse died due to their work in the military
There are some restrictions to these eligibilities. For example, your chosen lender may still have credit score minimums.
Applying for a VA Loan
There are two main steps for applying for a VA Loan. First, you’ll have to ensure your eligibility. You can do this by checking the VA’s official website. Be sure to call them with any questions you may have.
Next, you’ll need a certificate of eligibility. The easiest way to acquire one is through your chosen lender. If you haven’t chosen a lender, you can also apply online through the eBenefits portal, or by mailing in a paper application.
Once you have a certificate, you can apply for your mortgage and you’ll be on your way to buying a home.