Military Financial Tips #6 My VA Home Loan Buying Experience

Have you considered a VA Home Loan for buying your next home? At The Part Time Investor I believe home ownership is a key ingredient to building wealth. Owning a home outright is one of my goals to financial independence.

After 8 years of paying rent I realized my money, or should I say my Basic Allowance for Housing (BAH), was literally going into someone else’s bank account and making them wealthy. Furthermore, when I crunched the numbers at the time I found that a mortgage was cheaper than paying rent every month. While this may not be the case now it was a major catalyst and is probably still true in other parts of the country.

As an active duty service member you become eligible for a VA Home Loan after 90 days of continuous active duty service. After 181 days you are then eligible for a VA Home Loan for the rest of your life, whether on active duty or not. There are a lot of exceptions and different cases that can be found here.

VA loans have several benefits:

  • Zero dollar down payment required.
  • Private Mortgage Insurance is not required. (This lowers your monthly payments.)
  • The VA guarantees a portion of the payment with your bank making it slightly easier to get a VA loan versus a traditional home loan.
  • No penalty for paying your loan off early.

Tips:

  • Have at least $10,000 dollars to help with closing costs and escrow. You can ask the seller to cover most of these costs but they can refuse.
  • Ask your bank if they have a preferred Real Estate Agent network rewards program. I got $2,000 for using my banks referral network.
  • If you are buying condo a majority of tenants must be the owners.
  • The home inspection must pass at a higher standard than a traditional home loan.
  • My BAH covers the mortgage, utilities, and HOA. You can actually pocket the difference depending on how you want to live.

So far I have been very happy overall with my decision to buy a home. I get quarterly updates from my bank with the projected value of my home and it has risen every quarter for the last three years. On par with the appreciation has been the monthly principal pay off which has helped me build equity.

One final note; I have mentioned before that I would like to own rental properties in the future. VA loans can only be used for you primary residence. You cannot use them to leverage multiple properties.

Thank you Kristen for the article idea!

Please feel free to ask questions or comment below.

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