Home Loan Q & A’s

Making the decision to sign on the dotted line for a mortgage can be daunting. For many military families, it is the biggest purchase they will ever make in their lifetimes. Despite this weighty decision – it’s also one of the best feelings, too.

In 2014 my husband and I made the decision to purchase our first home. It wasn’t a large loan but I still found myself internally hyperventilating. Part of it was that I thought buying a house would be similar to a car, a process which I detested at the time. You know those animal documentaries that show the vultures circling overhead? To me, those were the car salesmen.

Slightly dramatic, I get it. I was pleasantly surprised when our VA home loan process was nothing like that. It was smooth, issue free and they did what they said they were going to do. It shifted my whole perspective on buying! After we sold that property in 2018, I wasn’t nervous to buy again in 2019. The home lender you choose definitely has a part in making the process seamless, but knowing what it looks like also takes the fear away. Here are the basic Q&As for home loans.

Traditional or VA Home Loan?
The traditional home loan is what it says it is. Depending on the lender and credit scoring there is a down payment requirement. Sometimes private mortgage insurance may also be required as well. The interest rate is fixed and based on the market, nothing really sneaky or confusing here. The VA home loan is secured by the government, so a down payment isn’t required.

A few years ago, the difficulty in making this choice really was based on the fact many military families waited until retirement to utilize their VA benefit, since the borrowing was capped at $500,000 and had weird criteria to borrow more than once. Since the passage of the Blue Water Navy Vietnam Veterans Act in 2019, all of that changed. The removal of the loan limits has made it much easier to continue to utilize this loan.

Choosing between the two is really personal preference. As of the publishing of this blog, the interest rates for VA home loans are a little lower. Costs are definitely cheaper. Do your research and pick the option that works best for you and your family.

By the way, these are the only two loans I am covering because I personally feel that the adjustable rate mortgage is a risky endeavor which should only be undertaken by those who can truly take it on. I worked in banking during the financial crisis, this is not a loan I would ever be comfortable talking about as an option in my life or for many military families.

How much will my monthly mortgage be?
It all depends on the following factors:

• Purchase price of your new home
• Annual interest rate
• The mortgage length terms
• Down payment
• Escrow requirements based upon taxes and insurance, which can vary from property to property.

There are so many lenders out there – how do I choose?
Talk with other military families in the area to get recommendations. They’ve gone through the process and will tell you the good, bad and ugly. Look for lenders like Caliber Home Loans, who have the Military Friendly Brand ® and an internal educational training program that provides team members an opportunity to earn the Military Veteran lending Professional designation. This stamp of approval will give you a little extra security, especially if you are like me and had vulture visions.

What will make my mortgage lending experience smooth?
This varies from person to person, depending on expectations. So, I’ll share what mine were for the two times we’ve purchased a home.

• Excellent customer service
• Sticking to the schedule. This is vital, especially when you are in the middle of a PCS!
• Knowledgeable and able to answer any questions that arise in a timely manner.

How much should I take out in a home loan?
Disclaimer: I am not an economist or financial expert. But I am a military spouse who’s had to rely on her service members income to carry the household a time or two. With this in mind I am giving my personal advice based on experience.

• Ensure that your mortgage payment is at least $400 under your BAH. This allows the remainder to be for your utilities. In the event that you are a single income household at any point, this allows some cushion.
• Make sure you factor in what your escrow payment will be each month on top of the home loan cost. This is a cost many people forget about when they are house hunting.
• Less is more, in this case. As a military family our lives can shift at any time. Ensuring that you aren’t in a home that’s too expensive to maintain or sell if it comes to it, is important. Your home is your sanctuary and should be what you love, but also make sure you are able to handle the responsibilities that come with it.

As you take on your home purchase, I hope you soak in the excitement of the moment. Owning your own home is an experience like nothing else. In a world where everything shifts to the will of the military, it’s a beautiful feeling having something that’s just yours to do whatever you want with. Happy home buying!

If you are a servicemember on active duty, prior to seeking a refinance for your existing mortgage loan, please consult with your legal advisor regarding the loss of any benefits you are entitled to under the Servicemembers Civil Relief Act or applicable state law.

Jessica Manfre
Military Spouse & Blogger