The life of a military family is filled with obstacles and uncertainties. But, the emotional challenges are balanced with a collage of unforgettable family moments, and an array of much-deserved financial benefits.
Veterans Affairs mortgages, commonly known as VA loans, enable servicemembers, veterans, and eligible surviving spouses to secure a 100% loan up to a specified dollar amount with no down payment. Many active duty military personnel underutilize their VA loan privileges because they simply don’t believe they have buying power. This article will help you not only understand how a VA loan works, but also leverage your VA loans as part of a savvy real estate investment strategy.
Getting a VA Loan
The eligibility requirements for obtaining a VA home loan vary based on service status, and are listed on the U.S. Department of Veterans Affairs website. Active duty military are typically eligible after 6 months of service. If you have solid credit and income along with a Certificate of Eligibility, you are ready to seek prequalification and preapproval.
The key benefits for VA borrowers are:
*No down payment
*No mortgage insurance needed
*Your VA entitlement is reusable
People often assume that the loan is coming directly from the Department of Veterans Affairs, which is incorrect. The loan is still made by a private lender, while the VA guarantees a portion of it.
Investing with Your VA Benefit
Military families often assume they have to rent because they move to a new location every few years. But, any financial advisor will tell you that renting is generally comparable to throwing money down the drain.
“If you’re seeking long-term financial success, you can consider purchasing your VA loan entitlement in the city you are stationed in,” says Ruth Ann Fisher, team leader of Del Coronado Real Estate. “You can then rent out your previous home(s) so that your tenants are essentially paying your mortgage(s).
Fisher is a military wife who had moved 17 times in 22 years before finally making Coronado her permanent home in 1999.
While employing Fisher’s recommended strategy, you are building a strong portfolio of properties that you can continue to rent out, sell, or pull equity from. Each home you live in becomes an investment, which can also go a long way toward easing the anxiety and disconnect your family might feel knowing that home is always temporary.
4 Steps to Owning in Coronado
Coronado is an especially lucrative market that military families can tap into by pairing a VA loan with your Thrift Savings Plan (TSP) as your down payment. For slightly more than you would pay in rent, you can buy a home that has the potential to double in value over the next decade. Enjoy being a homeowner in paradise for the next few years, and when you’re no longer stationed on the island, rent out your Coronado home so that it slowly pays for itself.
Buying a home here may seem daunting, but it’s really only a four-step process:
1. Contact a local realtor so that they can direct you to a lender specializing in VA loans.
2. Work with your realtor to determine your buying power factoring in your collective VA benefits (including housing allowance, bonuses, etc.).
3. Start shopping and viewing homes that fit your budget, needs, and lifestyle.
4. Negotiate an offer that maximizes all of your VA benefits.
As Coronado’s premier real estate brokerage, Del Coronado Realty has helped countless military families use their VA benefits to buy in beautiful Coronado. If you’re looking to do the same, contact us at 619-437-1888, or visit our office located in the iconic Hotel del Coronado.