VA’s Home Loan
By Thom Stoddert, 2/17th Cav, 1970
Being a target for every business, ethical or otherwise, is not what I earned in the jungles of Vietnam or as a medic in Desert Storm. Yet every week, I receive a formal looking envelope in the mail informing me that the VA has qualified me for a special program within its loan guarantee program. The envelope looks just like the ones the VA uses, with a logo like the VA’s.
Calling the 1-800 number, a woman who worked at a marketing telephone call-center assured me they have a relationship with the VA. She then connected me to another person who tried to sell me a mortgage. The mortgage agent, when pressed, admitted that he was a private commercial company, not affiliated with the VA, but still tried to impress upon me that they were doing this because of their patriotism and love of veterans. He dodged my questions about why his mailers appeared so much like VA correspondence that they seem to suggest they are a part of the VA system. I thanked him, telling him I was not a special marketing niche, and hung up. Then my research started.
The VA will give servicemembers, veterans, and eligible surviving spouses a chance to not only become homeowners, they will provide a home loan guaranty benefit and other housing-related programs to help them build, repair, retain, or adapt a home for your personal occupancy. VA Home Loans are provided by private lenders, such as banks and mortgage companies. VA guarantees a portion of the loan, enabling the lender to provide you with more favorable terms.
The VA also has a Cash-Out Refinance Loan, which is for homeowners who want to take cash from their home equity to take care of concerns like paying off debt, funding school, or making home improvements. The Cash-Out Refinance Loan can also be used to refinance a non-VA loan into a VA loan. VA will guaranty loans up to 100% of the value of your home. All of this comes with many advantages for the mortgage seller and the home buyer.
The lender has the assurance that they won’t lose any money on the loan at a time when so many homes are being repossessed by banks, this is great protection. No surprise there are so-called VA home loan specialist and experts everywhere.
The borrower gets a more competitive interest rate on the loan and does not have to pay for additional insurance or fees. For example, mortgage insurance is a common requirement of mortgage agencies, but not for VA backed mortgage loans. This is a monthly savings for the borrower. Most often there is no need for any down payment to be made on the mortgage. How many service members transitioning back to civilian life have 10% of the cost of a house on hand?
Where does a veteran/service member start? Find a good real estate agent who look out for your interests. That agent can guide you through the pitfalls and advantages at each step during the sale, making up for your ignorance on a complex procedure.
The next step, obtain a “Certificate of Eligibility” or COE. This can be done on line at the VA’s website at eBenefits or more commonly through the lending agency you are working with.
At some point the service member or veteran will have to decide which mortgage company to go with. They may be found in almost every strip-mall, newspaper, and web-page advertising. After talking to the mortgage specialist at the Home Street Bank, an institution that has several banks in the Puget Sound Region, it is my opinion that agencies like them are the best sources for a mortgage.
First they are local, located near their customers and offer face-to-face contact during the entire process and afterwards. This allows the bank and the borrower to build a relationship of mutual trust during the life of the mortgage. Further, they know the environment of the purchased property. In other words, they know the local laws, the geology, the weather, and other such factors effecting the property being purchased and can provide you important individualized service. In the end they are your neighbor.
On the other hand, working with a mortgage company that was found on the internet, a mailing, or the TV can be a good thing because they can be very experienced in handling the complexities of a VA Home Loan. However, how can you be assured that they are a reputable company when they are based in another state? How easy would it be to resolve a problem over the phone or internet? Lastly, would they be the loan-manager throughout the life of the mortgage or loan or will they sell the mortgage to another institution causing you to send the check to a different location each time ?
As I was writing this article, a letter came from the “Olympia Processing Center.” The inside pictured a logo very similar to the VA’s with “We Honor Veterans” written next to it. The letter was from the “Washington Veterans Administration Program” with a message addressed to me asking me to call 1-800-218- 2013, now! If not, they will make two more attempts by mail or phone to contact me - because they believe I am not receiving the government benefits I am entitled to. Then in small print at the bottom,”This offer is being made by Majestic Home Loan, they are not affiliated with any government agency.” Hmmm! Can I really trust these people? No - I am not a marketing niche for any one less than straightforward and ethical.
For more information visit the Veterans Benefit Administration’s web site.