You’re a veteran or service member, and you want to purchase a home.
You’ve smartly decided to use your hard earned VA mortgage entitlement. But from there, you are less certain of how to ensure you get the best deal. There are numerous tips, tricks and negotiation tactics that can help you obtain a good deal.
Here are 5 important tips to make the most of your VA purchase transaction.
Ask For Seller-Paid Closing Costs
When using your VA benefit, it’s important to consider how you’ll handle closing costs. You’re not able to roll your closing costs into a VA mortgage, so it’s important to consider how you’ll handle these costs prior to making an offer on a home. In most cases, you’ll have three options to deal with closing costs, and depending on your financial situation, some may be better than others.
The first option is to ask the seller to pay the entirety of your closing costs. This is the first route you want to explore when negotiating a contract. Some sellers will be more motivated than others to cover your closing costs, depending on multiple factors, including the market in your area, how long the home has been on the market and how quickly the seller wants the home sold. If you’re able to negotiate all closing costs paid by seller, then you have the best possible scenario.
Your second option is to pay closing costs out of pocket. This is a good option if you have the funds set aside, because it can reduce the amount you finance for the mortgage. It’s not a good option, or not a possibility if you don’t have the funds available or have other intended uses for your savings.
If the seller refuses to pay for the closing costs and you don’t have the funds to pay for them out of pocket, your third option is a type of workaround to rolling the costs into the loan. In this situation, you offer to increase the purchase price enough to cover the closing costs, and in return, the seller agrees to pay them. This provides the seller with the same bottom line, and in effect, rolls the costs into the mortgage.
Use a VA-Familiar Realty Agent
Choosing a knowledgeable real estate agent can have a huge impact on your homebuying process. When you are using your hard-earned VA benefit, it’s imperative to work with an agent who understands the ins and outs of the VA mortgage. With knowledge of the VA’s requirements, an experienced real estate agent can help you find the right combination of home that meets your needs, is within your preapproval price range and that meets the VA’s minimum property requirements.
Get a Home Inspection
It’s not required that you get a home inspection, but it is required that an appraisal be conducted. It’s a common misconception that the home inspection and appraisal are redundant. In fact, this couldn’t be further from the truth.
Yes, both the appraiser and home inspector look at the inside and outside of the home, but that is the extent of their similarities. The appraiser’s job is to assess a value to the home and to ensure the home meets the VA’s minimum property requirements (MPRs). MPRs were established to ensure the home is safe and habitable. The appraiser looks at the big picture and the home inspector looks at the details. A home inspector’s job is to look into every nook and cranny to ensure the home is up to code and note each and every issue, big or small, that they see. While the appraisal might note some obvious issues (peeling lead-based paint, for example), the home inspector is going to point out a lot of issues that may not be visible to the untrained eye (such as wiring that isn’t up to code).
Home inspections will run you several hundred dollars, so they aren’t cheap, but they’re totally worth it. They’ll identify issues with the home and allow you to make an educated decision on whether you want to proceed with the sale or request that the seller make repairs before moving forward.
Walk Away If It’s Not In Your Budget
One of the most difficult things to do when shopping for a home is to walk away from the “perfect” home that just happens to be outside your budget. It’s easy to get thinking that maybe you could make some cuts here or there to allow for a larger house payment, but this is dangerous. First off, you may not qualify for a higher loan amount. Second, do you really want to make the sacrifices necessary to get that bigger home? Buying more home than you can afford may also lead to buyer’s remorse. I know this is tough, but do your best to stay as emotionally detached from a home as possible until you’ve closed on the loan. This can help you make a decision with your “budget hat” on instead of letting your heart take the lead.
Work With a Lender Who Knows VA Mortgages
This one is huge. If you don’t work with a lender that closes VA loans all day every day you’re setting yourself up for a more stressful loan transaction. If you’ve got a problem with a bone in your foot, you don’t go to a doctor who specializes in dermatology who has dealt with one or two bone issues in the past 20 years. Instead you go to a specialist who focuses on podiatry.
The same should go for your mortgage lender. You don’t want to work with a bank who has closed a few VA mortgages in the past year, you want a lender that specializes in VA loans. A VA mortgage expert will streamline the process and know the intricacies of the VA loan to help guide you through transaction all the way to the closing table.
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