Our main goal here at HawaiiVALoans.com is to educate current military personnel and Veterans about their VA Loan Benefits. When you look at the benefits that the VA Home Loan Program provides compared to doing a conventional mortgage – you truly realize how advantageous it is to be a VA eligible home buyer.
In addition to these benefits, most current military personnel have another great advantage in that they currently receive a monthly housing allowance to pay or subsidize their housing payments. This housing allowance, also known as BAH, can range from $1491 – $3419 per month depending on rank and whether this person has dependents or not.
I often speak with military personnel who just PCS’d (Permanent Change of Station) here to Hawaii. What I’ve noticed is that the general housing plan for them is to either accept military housing (in which they do not receive a housing allowance) or use their housing allowance to rent. The most common answers to why they chose these two option over buying a property are:
1. “Buying a home is complicated”
2. “Can’t afford it” (upfront costs and monthly payment)
My response to the first answer is that the home buying process is actually relatively simple process that can take as little as 30-45 days to complete as long as you have the right team to advise you along the way. When I say the right team, I mean a VA Loan Specialist who can guide you through the nuances of VA financing and a VA Home Specialist who is a knowledgeable real estate agent with experience working with previous VA home buyers. With this right team in place, buying a home is really not complicated at all.
As for the second reason, “I can’t afford it” – this obviously can be left to interpretation depending on the buyers needs and wants. But let’s examine this a little closer because the cost of homeownership for VA eligible buyers may be a lot cheaper than most people think.
First off, one of the great benefits of VA Loans is that there is reduced closing costs versus doing a conventional mortgage. Since the VA Department doesn’t allow the Veteran to pay certain fees, the seller and lender must step in and pay for certain costs. The closing costs savings for a typically VA buyer can translate to roughly $1500 – $2000, depending on the loan amount.
With reduced closing costs, the possibility of getting a seller credit combined with the fact that there is no down payment required for a VA Loan – it is not unusual for a VA buyer to come in with little to no money out-of-pocket at closing (most cases less than a typical security deposit for rent).
What about the monthly payments? Well, this is where the housing allowance comes in (if you are currently in the military). As I mentioned above, one’s housing allowance can vary depending on a couple factors. What I try and do as a VA Loan Specialist is take that housing allowance number and calculate what that payment would be converted to in terms of a loan amount with no down payment.
Even when we get this loan amount figure, it may still be hard to determine what someone can actually buy with this purchase price unless you are familiar with the inventory on the market. One good resource to find properties currently for sale is to search the MLS listings here.
Now if you are serious about becoming a homeowner – this is what we advise you to do:
Step 1: Download our 21-page VA Homebuyers’ Guide. This will give you a good overview of the benefits of the VA Loan Program as well walk you through the steps of the Home Buying Process.
Step 2: If you live in Hawaii – we encourage you to attend one of our VA Home Loan Seminars. This seminar goes into more detail about the VA Loan program – and we actually share with you the techniques we use to qualify you for a VA Loan.
Even if you don’t utilize any of the free resources we provide, we encourage you to contact a reputable VA Loan Specialist (preferably one who was recommended by someone that you trust) to get more information on how you can qualify for a VA Loan. Remember – not all loan officers or loan brokers have experience doing VA Loans – so make sure the one you use for your VA transaction is actually a VA expert!