Advantages of Home Ownership for Military and Veteran Home Buyers


          

Veterans, service members, and their families believe in homeownership. In fact, the homeownership rate among veterans far outpaces that of civilians.

However, the financial toll of military service can make it challenging for some veterans to get ahead financially, let alone get a home loan.
The good news is military members and veterans have access to an array of home buying options and protections.
VA loan program

Since the VA loan program’s inception, the Department of Veterans Affairs has helped over 21 million veterans, military members, and their spouses receive loans. This program has made buying a home more accessible to those who serve and protect our great country.

VA loans feature many benefits that help make home buying possible, including the following:

• No down payment requirement
• No mortgage insurance
• Limits on closing costs
• More flexible credit requirements
• Lower average interest rates

VA home loans have soared in recent years, attracting many veterans and military members who may not qualify for conventional loans, which have stricter credit requirements.
Still, many eligible buyers are unaware of the benefits of VA home loans and the protections they offer. Some buyers also make the mistake of assuming a government-backed loan comes with endless red tape and miss an opportunity to benefit. It is important they are talking with realtors and loan officers who understand this process. Many take solace in working with professionals who are veterans themselves.
Typically, veterans and active-duty service members are eligible for a VA home loan if they served in the following capacity:

• 90 consecutive days on active duty during wartime
• 181 consecutive days on active duty during peacetime
• 6 or more years in the National Guard or Reserves

Some spouses of military members who died in the line of duty or of a service-related disability may also be eligible for a VA loan.

Basic allowance for housing:

Many active-duty military members who receive a monthly housing allowance can use this money to qualify for a home loan. Lenders can count Basic Allowance for Housing (BAH) as an effective income for active-duty military. This helps military members (even more so in higher-cost areas) consider buying and owning a home vs. renting.
To calculate your BAH, refer to the BAH calculator on the Defense Department’s website.

Financial protections

It is known that certain military members can face financial challenges as a homeowner. Factors such as changes in the station or long-term deployment can cause financial strain.
The Servicemembers Civil Relief Act (SCRA) provides active-duty military personnel and their families financial protection involving interest rates, income tax payments, eviction, foreclosure, and more.
For example, military personnel can ask creditors—including their mortgage lender—to cap their interest rate at 6% during their term of service. The SCRA also forces lenders and servicers to seek a court order to foreclose on active-duty military members during their time of service and up to nine months afterward.
Veterans Affairs also offers foreclosure avoidance protection assistance for homeowners. The VA has a team of experts who work with lenders and servicers on behalf of struggling homeowners to find alternatives to foreclosure.

Author – Colette Morales