VA Loan Program Helps Clear the Path to Home Ownership
Successfully transitioning from the military to civilian life includes setting and maintaining goals. For many veterans, one of those goals is to own a house; a task not easily completed in the current economy. While many millennials are finding it difficult to save enough money to afford a house of their own, the Albuquerque Journal reports many veterans are using VA backed loans to purchase homes without damaging their finances.
Veterans and service members like Air Force Staff Sgt. Claude Hunter have been enjoying the benefits of VA loans for a while, but the number of VA loans in use is creeping upward. Hunter was able to close a deal over skype during a deployment on a house worth $219,000, and he didn't have to put any money down.
"On Facebook, my friends have started posting: 'I got my VA loan, I got my house,'" said Hunter, 31. "Everybody is just ready. A lot of them have done their jobs overseas and are coming home."
While the housing market is still recovering, the VA loan is becoming increasingly valuable. Not only is it more difficult to buy a house, but other loans with government backing are more costly to veterans. Currently, VA loans are backing more mortgages than any other point in the last twenty years.
"The reduction in uncertainty for the returning vets allows them the freedom to spend more, including buying housing," said Sam Khater, deputy chief economist at CoreLogic Inc., an Irvine, California-based property-data firm. "VA buyers are coming into the market in higher and higher proportions and tend to be first-time buyers, one of the missing drivers in the recovery in housing demand."
Currently, VA loans are responsible for 8.1 percent of mortgages in the U.S. and are worth roughly $19.5 billion. According to Inside Mortgage Finance, this is up from the two percent level seen ten years ago.
VA loans are currently making it possible for veterans to own homes while having enough money to spend on other opportunities such as education. Michael Malarsie went from being flung into an irrigation canal by an IED to owning his own home within two years. After surviving the explosion, he was presented with a new home by Operation Finally Home. However, he and his family decided to sell the property and use a VA loan to purchase a new residence closer to public transportation. Now he plans on attending college to study communications and possibly computer science.
Although VA loans aren't always the best option available, there are a number of other factors that make them so attractive. One of the most poignant is that the VA usually backs up to 25% of each loan which helps reduce the burden on the lender of a default. What tends to save veterans the most money is the fact that most VA loans, about 90%, don't require down payments. As a further measure of security, underwriters must check the veteran's finances to see if they earn enough to cover other basic living expenses and pay their bills on time.
Recovering from the previous housing crisis has been shaky, but VA loans are providing veterans viable, economic options with safety precautions to reduce the number of defaults.