Most veterans like to feel prepared. Since buying a house is one of the biggest decisions you’ll make in a lifetime, knowing what lies ahead is essential. If you want to ensure that you’re ready, the Golf for Injured Veterans Everywhere Foundation shares what veterans need to know about buying a house.
The Financial Part of the Picture
The financial part of buying a house is complex. While VA loans don’t have to include a minimum credit score, many lenders still do. Plus, a minimum score in the 580 to 620 range is common for other kinds of loans. As a result, you’ll want to make sure that your credit report is error-free, giving you the highest score possible. You’ll also want to take a look at your debt. Generally, lenders prefer borrowers with debt-to-income ratios no higher than 36 percent. If yours is above that, then paying down debt first is a good move.
Figuring out what’s affordable is also crucial. Typically, you want your mortgage payment to be no more than 28 percent of your gross income. In many cases, your property taxes and homeowner’s insurance get wrapped into your mortgage payment, so keep that in mind when you estimate how much you can afford. Once you have a general figure, research home prices in your area. You can then figure out if you can reasonably afford to buy in the area.
Make sure to budget for any possible repairs or modifications you may need to make to your new home. Fixing your roof or using a roof replacement company, making electrical repairs, and adding home security features can all add to the cost of purchasing a home. Make sure that any locksmith you work with can provide you with referrals and a warranty for their work.
Different Types of Home Loans
Most veterans know that there are several kinds of home loans. While they may appear to vary by lender, most of the options fall into one of these five categories:
- Conventional
- VA
- FHA
- USDA
- Jumbo
Along the way, you’ll likely notice two interest rate options: adjustable-rate and fixed-rate. Every one of the options and interest rate arrangements has a unique set of benefits, drawbacks, and requirements. Take a look at them all to see which could meet your needs best.
Once you decide on a loan type, it’s time to go through the preapproval process. In some cases, it’s wise to apply with several lenders. That way, you can compare the interest rates and maximum loan amounts to see which gives you the best deal.
Handling Property Searches
When it’s time to find a property, it’s smart to find a realtor. Realtors understand the local market and home buying process, making them valuable guides. They will be able to assist you in understanding your budget and in your effort to find a home in the Des Moines area.
During your first meeting with a realtor, be open about your budget. Then, review your must-haves list. That may include specific home features, preferred locations, or other similar details. As your realtor presents houses, give honest feedback. Let them know what you like and dislike about the property. That way, they can adjust their search accordingly, allowing them to drill down to the perfect home for you.
Placing Offers, Negotiating, and Closing
Once you find a property, things can be a bit hectic. It starts with you placing an offer, listing any requests (like having the seller cover closing), or contingencies in the paperwork. Next, there is usually a short period of initial price negotiations between you and the seller.
If you and the seller agree on the price, you’ll move onto an appraisal and home inspection. These are assessments that identify issues with the property and estimate its market value. After the inspection and appraisal, there’s commonly a second round of negotiations. This may include repair requests or price adjustments, depending on what the assessments reveal.
If you again agree on a price, you’ll get closer to closing. Your lender finalizes your mortgage, and you get a closing date. During the closing meeting, you’ll sign the loan paperwork and receive your keys, making the home officially yours.
This article was brought to you by the Golf for Injured Veterans Everywhere Foundation, a not-for-profit organization that provides a golf instructional program for eligible injured or disabled Iowa-based veterans who use the Des Moines, Iowa City, and Sioux Falls VA Health Care Systems. For more information, contact us today!