Weld and Larimer Counties are home to more than 38,000 veterans, many of whom are homeowners and many of whom have not taken advantage of one of the best benefits of serving their country.
“They should be tapping into VA home loans,” said Peggy Kramer, a loan officer for Elevations Credit Union in Fort Collins. “I don’t see as many as I should be seeing.”
VA Home Loans are provided by private lenders, such as banks, credit unions and mortgage companies. VA guarantees a portion of the loan, enabling the lender to provide veterans, active-duty military and surviving spouses with more favorable loan terms.
“I love VA loans. They’re one way that we can pay back veterans for years of service to protect our country,” Kramer said.
What sets them apart from conventional home loans?
For starters, no money down, limited closing costs, low interest rates and no private mortgage insurance.
In comparison, a conventional home loan requires a minimum of 3 percent down and private mortgage insurance until the homeowner gets to 80 percent loan to value. Only then can be dropped, Kramer said.
While VA loans require a funding fee, it is minimal in today’s dollars. For example, with 5 percent down on a $517,000 house, the funding fee would be $2,800, said Michelle Roberts, a Realtor and founder of Veterans Housing Network, a nationwide real estate referral service headquartered in Fort Collins.
Roberts, a veteran of Desert Storm and former commander of the Fort Collins Veterans of Foreign Wars, said she created VHN to connect veterans, active duty and surviving spouses with real estate agents who themselves are veterans and who understand what’s at stake.
“I saw a real need,” said Roberts, who has been in real estate for more than 20 years. Her comrades, she said, rarely understood the benefits of VA loans and many others were preyed upon by large national lenders who claimed to have “veterans best interest in mind” while charging $10,000 or more in extra fees.
VHN focuses on educating and supporting the military and veteran population on how to use VA loans when purchasing their homes. The referral service also educates veterans on how they can use VA disability and/or basic allowance for housing (BAH) to purchase a home and by doing so increase their net worth.
“Close to 50 percent don’t know how to use a VA loan. There are a lot of myths. My mission is educating them on how to use VA loans and change their futures,” she said.
In addition, she said many real estate agents don’t understand them, so they sometimes steer clients to conventional mortgages.
“In this crazy market, listing agents and sellers see them as really complicated. They’re not,” said Roberts.
Because the VA works only with preferred VA appraisers, many sellers believe the process will unearth numerous issues and therefore don’t consider offers attached to VA loans.
“They (VA appraisers) are looking for health and safety issues within the property,” Kramer explained. “The home doesn’t have to be pristine.”
And, Roberts added, VA appraisals do not take any longer to get back than non-VA appraisals. They’re done more quickly if not faster,” she said.
Another myth is that VA loans can only be used once. Quite the contrary said Roberts, noting they can be used “again and again,” but only for properties in which the veteran and his or her family intend to live for the next 12 months. Should he or she be deployed before then, however, the home can be rented until they return.
VA home loans, however, cannot be used for homes purchased as investments or for vacation homes.
While it’s easy to go online and apply for a mortgage, Kramer pointed out it’s important to know who you’re doing business with.
“Elevations is local. We give back into the community and we support foundations that are local. It’s a lot easier to deal with somebody who is local. You can come right into the office.”
Kramer’s advice to prospective VA homebuyers?
Begin your home search by first talking to a loan officer and real estate agent familiar with VA loans and options — including cash offers — that could make the process easier in today’s competitive real estate market.
By Luanne Kadlub for At Home Colorado