During a recent meeting with a referral client, we discussed financing, as we always do upon first meeting. The couple, we’ll call them Kat and Brian, now sharing a home with friends in the Powderhorn neighborhood of Minneapolis, had decided it was time to find a home of their own. They displayed all the signs of being ready to buy: They had saved enough money for a comfortable down payment, started perusing homes online, asked friends for referrals, and—the second most common reason people buy homes, wanting to provide a good home for their children—were expecting a baby. They were determined to be settled into their own home by the time their baby arrived in September 2015.
Brian had served in the armed forces, and so was eligible for financing with a VA (Veteran’s Affairs) Home Loan. There are numerous benefits to using VA financing, including
- Lower Interest rates (compared to conventional loans),
- No down payment needed if purchase price doesn’t exceed appraised value,
- No private mortgage insurance required in most transactions,
- Limits on closing costs,
- No minimum credit score required, and
- No prepayment penalty.
In addition to the these benefits, loans can be used for a variety of housing purchases, such as
- Buying a home, a condominium unit in a VA-approved project
- Building a home
- Simultaneously purchasing and improving a home
- Improving a home by installing energy-related features or making energy efficient improvements
- Buying a manufactured home and/or lot.
After meeting with me, Kat and Brian met with a lender to get pre-approved. They submitted their paperwork and were on their way to finding the right home to be settled into by July, until… The lender informed them of one minor glitch in their plan: Because they weren’t married, they couldn’t use Kat’s salary (the breadwinner of the two) to qualify for a VA loan using Brian’s eligibility.
Fortunately, this snafu will only set them back by a few months, as they are planning to get married this summer. When the time comes, these 2.5 will uber motivated to find the right space to begin their life as a family!
The moral of the story: You simply never know what’s going to happen until you start the pre-approval process—not how much you qualify for, or what kind of additional information the lender might need. When you think you’re ready to start looking at homes, do yourself a favor and get started right away!
Looking for a qualified lender? Contact HomesMSP for a referral!
Angela Anderson, 612-396-3654
Licensed Associate Working with Sharlene Hensrud of RE/MAX Results, and HomesMSP — Sharlene, John, Angela