Maybe you've got new orders in hand, or maybe you're getting out of the military and looking for that forever home. No matter why you're in the market to purchase a home, the process can be nerve wracking and complicated -- especially for first timers.
As a military relocation specialist I've learned a few secrets over the years that may come as surprises to new homebuyers.
1. You get your 'earnest money' back.
Your earnest money deposit, about one percent of the sales price in some markets, is the check you have to write when you submit your offer on the house. That money does come out of your bank account when your offer is accepted, but it just sits protected in the bank account of your escrow agent (most often your real estate broker, title company or settlement agency).
Change your mind about buying the home? You forfeit that earnest money if you just wake-up one morning and decide you don't want the house anymore, unless you are still under the protection of the typical contingencies such as financing, appraisal, home inspection, and review of association documents if the home is in a Homeowners Association or condo.
On settlement day that earnest money comes back to you as a credit, to the extent that if you are taking advantage of the VA 100% financing program, and you negotiated for the seller to pay all of your closing costs for you, you will be given that money back after closing.
2. Your biggest closing cost expense when using your VA loan is the "funding fee."
The funding fee is a percentage of your loan amount, and it varies based on several factors that I typically leave to a loan professional to calculate. (Active Duty vs Reserves/National Guard, whether or not you have used a VA loan before, and whether you are making a down payment) This funding fee can be paid in cash at closing, or you can "roll the fee into" your financing.
What lenders may or may not know to explore for you is a rule that waives that funding fee if you are receiving VA compensation for a service related disability. Your disability should be noted on your Certificate of Eligibility.
3. Hiring a Realtor helps -- even if you're buying a new home straight from the builder.
Everything about buying a home from the builder is builder-friendly, and sales agents working for a builder will often advise against having an agent, in order to "save you money."
But when you hire a Realtor, you're putting an expert in your corner. I have negotiated all kinds of discounts for my buyer clients, once had to get the Department of Veterans Affairs involved in some shady lending tactics, and recently threw my weight in when one builder wouldn't allow my buyers to attend their own home inspection. Builders really don't like having a Realtor like me at the final walk through inspection when I ask for the whole roll of blue painters tape reserved for identifying blemishes in the home. You know who benefits from that work? You, the buyer.
Not buying a new build? Having a professional representing, educating and navigating you through the whole process is still a good idea. Unless the home is "for sale by owner," hiring a Realtor is typically paid for by the seller. I always say if someone else is going to pay for you to hire any doctor or lawyer you want for a critical situation, why wouldn't you pick the best one you can find?
4. Not all lenders are created equal when it comes to their level of actual knowledge and experience with VA loans. While many lenders are "military friendly," being military competent is totally different in my book. I have seen deals fall apart because "experts" didn't even know that your Basic Allowance for Housing (BAH) is based on where you are assigned instead of where you are looking to shop for your next home.
Your loan approval letter that you submit with your offer is one of the main factors a seller (and the listing agent) will consider in not only whether they will work with your offer, but how negotiable they will be on terms. Pre-qualification, qualification, pre-approval and approval letters all have different meanings to a listing agent (who is your gatekeeper to the seller), and so does the lending institution on the letterhead. Make sure you choose a lender who knows what they are talking about and is well reputed in the marketplace where you are shopping.
