With interest rates at an all-time low and the benefits of using a VA loan, military families are finding that their dreams of home ownerships are becoming a reality.
“In our six moves as a family, Hawaii was the place that gave us that feeling of being home,” Navy spouse Sandy Caswell said.
So, when her husband was offered an opportunity to return to Oahu again for his final duty station before retirement, the family jumped at the chance. “We were blessed to find post-Navy jobs here that allowed us to start thinking about buying a home and planting our roots here,” Caswell said.
“With the interest rates dropping the way that they have, we thought, this is the time! Why wait any longer?”
Those interest rates are dipping to record lows.
According to Erica Dzikowski, a loan officer with Fairway Independent Mortgage Corporation in Honolulu, now is a great time to buy. During her 17 years in the business, she’s never seen rates this low.
To put it into perspective, she explains, “About 18 months ago the rates were roughly 2% higher. Now that they’ve come down . . . the average customer is seeing their buying power increase by approximately $120,000.”
The Caswells chose to take advantage of a VA loan to purchase their forever home.
“The benefits that the VA loan offers you, specifically if you choose the ability to put zero-down in a market like this, it makes buying right now that much more appealing,” Caswell said.
VA loan rates change daily based on market conditions but are hovering around 2.5% for a 30-year fixed purchase. If you already own a home but want to take advantage of these record-low interest rates, you can use a VA loan to refinance.
If you think you’re interested in purchasing a home using a VA loan, Dzikowski recommends going through the process of getting pre-approved.
The steps to do that, she said, are simple. Your lender will get your personal information on income and assets, pull your Certificate of Eligibility (a document provided by the VA as proof of qualification), ask for your LES and bank statements and review your credit. Getting pre-approval before you start looking at homes can help you avoid disappointment.
“You may fall in love with a home you tour or see online, but the market is so competitive right now. You might not be able to get your documentation together fast enough to put an offer in,” Dzikowski explains.
She also recommends having serious conversations about what kind of mortgage you’re willing to take on.“What you are pre-approved for versus what you are comfortable with could be two very different numbers. Don’t let your loan officer dictate what you can afford,” she said.
“A good lender will sit you down and ask what kind of monthly payment you’re comfortable with.”
Historically, some sellers have been cautious about accepting VA financing due to misconceptions about the program. However, Dzikowski said that’s changing.
“Over the course of the last seven to eight years, the real estate community has done a fantastic job of educating their clients on the VA loan and how advantageous it is.”
What is a VA loan?
A Veterans Affairs Home Mortgage Loan, otherwise known as VA loan, benefits active-duty service members, veterans, and some surviving spouses. VA loans are backed by the federal government but are issued through private lenders such as mortgage companies and banks. On average, VA loan rates are lower than both FHA and conventional loan rates due to the Department of Veterans Affairs backing a portion of each loan against default.
Additionally, the terms of a VA loan are generous and can include:
- No down payment
- No mortgage insurance
- No prepayment penalties
- Limited closing costs
The Caswells said it helped that their realtor, Erin Ellis, is a military spouse, and familiar with the ins and outs of VA loans.
“Military families face new and unique challenges every time they move to a new duty station. For those families who want to use their BAH to invest in real estate in a location they are unfamiliar with, it is crucial to work with a lender and realtor who understand VA benefits,” Ellis said.
VA loans can be even more appealing to sellers in the current climate as COVID-19 hasn’t negatively impacted military incomes and retirement in the way it’s hit other industries.
Nearly 5,000 miles away in North Carolina, the pandemic was the catalyst for a young Marine Corps family to purchase a home using a VA loan.
Joy Liu, says she and her husband, Wesley Sweeney, who works at Camp Lejeune, had grown weary of spending much time in their small apartment during their state’s mandatory stay-at-home order.
“We decided life was too short to keep living in our dark apartment if we didn’t have to,” Liu said.
She works as a financial advisor, and said while low interest rates weren’t the reason they chose to take the plunge into homeownership, it was an added benefit, making purchasing this summer an even better decision.
The couple bought a home on the water in Sneads Ferry, just a short drive from Camp Lejeune.
“It’s so nice to come home to a beautiful home and the water and the wildlife. Plus, we have more space and the ability to make the space our own, which is such a source of happiness.”
Back in Hawaii, the Caswells finally feel like they are home.
“It still feels surreal that we did it. We’re homeowners, and because Phil is retired for the first time in 20 years, we don’t have to move.”
For more information, visit https://www.benefits.va.gov/homeloans.
For more stories like this, including how to save, build retirement, navigate insurance and more, download our 2020 Military Money Guide.
