After 26 years in the Air Force, Mark Amezquita found himself at a career crossroads. Like many retiring veterans, the transition back into civilian life didn’t come without financial setbacks.
He bounced around jobs before landing steady work with the U.S. Forest Service in Albuquerque. But that rocky landing took a toll on his family’s credit.
Tired of renting, they wanted to plant roots in the community but figured buying a home was out of reach. That’s when Mark’s hard-earned home loan benefit came into focus.
The historic VA loan program has experienced a resurgence since the housing crisis. More veterans have used this $0 down loan in the last five years than in the prior dozen years combined.
“After financial counseling and paying some things off, we were able to get our credit score high enough to buy a home,” Mark’s wife, Tina, says. “There’s no way we could have made the leap to home ownership without his VA benefit.”
A big reason why is that it’s still tough for many military buyers to secure conventional financing. Military families can struggle to build the credit and savings needed for the typical conventional mortgage. VA loans allow qualified veterans to buy with no money down and offer more flexible and forgiving credit guidelines.
The average VA loan in New Mexico was about $220,000 in fiscal 2018. For many conventional loans, that would require an $11,000 down payment and come with additional mortgage insurance costs every month.
Today, about eight in 10 VA buyers get into a home without putting money down. Despite that, VA loans have been the most foreclosure-resistant mortgage on the market for more than a decade, according to data from the Mortgage Bankers Association.
Part of that success rests with the VA’s common-sense underwriting criteria, which includes a unique standard for disposable income. The VA can intercede on behalf of a struggling homeowner and encourage their loan servicer to offer alternatives to foreclosure.
Those efforts have helped more than 500,000 veterans avoid default over the last decade.
Created as part of the original GI Bill of Rights, the VA loan program has transformed from a niche offering to a critical part of the mortgage industry. VA loans now make up about 10 percent of the mortgage market, a huge increase in market share from even just a decade ago.
But there’s still work to be done.
Mark is one of the lucky ones. He’s now used his VA loan benefit to buy two homes, after the couple decided it was time to upgrade this spring to accommodate Mark’s mother moving in with them.
But one VA survey of veteran homebuyers found one in three didn’t know about the home loan program.
There are also lingering myths and misconceptions about the loan program that push away eligible veterans, real estate agents and home sellers. A few common and pernicious myths are that it’s a one-time benefit – you earned it for life; that sellers have to pay a buyer’s closing costs – they don’t; and that VA loans take forever to close – just a few days longer on average than conventional purchases, according to mortgage software firm Ellie Mae.
VA loans aren’t the answer for every veteran or service member, but knowing about this benefit and its advantages can help veterans better weigh all of their home financing options.
This unique job benefit turns 75 years old in 2019. It continues to fulfill its original mission and help a new generation of veterans and service members get a piece of the American Dream they pledged to defend.
On Veterans Day, one small way to give back is to make sure the veterans in your life know about all of their hard-earned benefits. Veterans and military families can contact the Veteran Benefits Administration and the New Mexico Department of Veterans Affairs to learn more about the programs and benefits available to them.
Veterans United Home Loans is the nation’s largest VA lender; Chris Birk is author of “The Book on VA Loans: An Essential Guide to Maximizing Your Home Loan Benefits.” He lives in Columbia, Mo.