R E S I D E N T I A L
REAL ESTATE
BE HOMESMART THE BATSON TEAM – FROM OUR VIEWPOINT
By Al and Jean Batson of The Batson Team
Q: I served my Country in the military. Can you help me understand my VA home loan benefits? A: Using your VA benefits provides you an excellent way to purchase a home utilizing a Zero-Down program with a lower interest rate than a nonVet can obtain. In fact, depending on how much of your “entitlement” is available to you ($484,350 is the maximum amount for a VA loan), you can purchase more than one property. If you already own a home with a VA loan but you want a different property, you can purchase a new property – but it must be your primary residence. You have the option to keep the original property as long as the total loan amount between the original property and the one you plan to purchase (as of today) doesn’t exceed $484,350. Additionally, you can use a VA loan to purchase a home at a sales price higher than $484,350. However, you must provide a down payment equal to 25 percent of the amount that exceeds the $484,350. For example, let’s say you
want to buy an $850,000 home and you qualify for the maximum VA loan amount of $484,350 - then you must make a down payment of $91,412 (25 percent of the difference between $850k and $848k). The point is that you aren’t restricted to a home topping out at $484,350 if you can come up with a down payment. For comparison sake, most Jumbo loans would require a 20 percent down payment of $170k on $850k sales price. In the past, if a Veteran was in competition with offers where Buyers/Sellers pay their own normal closing costs [Conventional loans], the Veteran’s offer was often declined because the seller was required to pay “nonallowable fees”” [meaning the Veteran was not allowed to pay them]. Those costs cut into the proceeds the Seller would receive. The good news is that today the VA allows the veteran to pay their own loan costs thus putting them on an even playing field with other offers. Those former “non-allowable fees” were Lender Fees, Escrow Fees, miscellaneous Title Fees, Notary Fees and the Termite Report (required for all VA Loans).
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Be aware that if the above referenced fees exceed 1 percent of the loan amount, then the Veteran can ask the Seller to pay the difference OR, more likely, to be competitive, he/she can take an interest rate of 0.125 percent above the current rate (which is a very minimal amount) to obtain a lender credit that covers those costs without impacting the Seller at all. What are other advantages to using your VA benefits, in addition to the lowest interest rates? Vets have easier credit requirements, no monthly PMI (mortgage insurance) payments and the best Jumbo rates available. If you’re a Veteran and have an interest in purchasing a home using your VA Benefits, your Realtor can put you in touch with lenders who will put to-
gether your pre-qualification letter and loan. We defer to the experts – Realtors are not Mortgage Lenders, but we value their expertise tremendously in putting the transaction together. We’ll find the property – the Lenders will work side-by-side with the Realtors, VA and Title Company’s Escrow officer for a successful close of escrow. (Information based on a Mortgage Disclosure for Agents continuing education class by Premier Financial Solutions, LLC/Ryan Halldorson/VIP Mortgage, Instructor) If you have questions or a topic you’d like to see covered, please email me at: Jean@AlandJeanBatson.com. We love to hear from you.
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