Whether they are still active or retired, U.S. service members account for 21 percent of all homebuyers and sellers. As a market segment, this demographic is very attractive. These individuals and their families move more frequently, and a bit farther, than their peer groups. They also tend to rely more heavily on Real Estate Agents to help them find their homes and close quickly. So, it’s important to help them understand their options, both in terms of housing and financing.
What’s Different About the Military Buyer
Clients who are still active in the military tend to buy higher priced homes than their civilian peers. This may have something to do with the access they, along with veterans, have to the VA home loan program. This program gives active military—as well as—veterans a decided advantage by making homes more affordable.
The VA home loan program was developed several decades ago. It takes into account the special financial circumstances military personnel face due to repostings and periods of deployment. As a result, the program offers six key advantages to active military and veterans:
No down payment required
No mortgage insurance
A limit on closing costs
Lower mortgage interest rates
Flexible credit standards
100% cash out refinance
A recent survey by the National Association of REALTORS found that slightly more than one-quarter of active military homebuyers do not take advantage of the VA home loan program. Additionally, a bit less than half of veterans use it for purchases or refinancing. This represents an opportunity for Real Estate Agents to educate military homebuyers on the program's benefits, such as the fact it may be accessed throughout a veteran’s life. There is no limit to the number of times the program can be used, nor does the benefit expire for those who are eligible.
Veterans and qualifying spouses should be encouraged to check their access to the VA program by requesting a Certificate of Eligibility from the U.S. Department of Veterans Affairs. They will need this anyway, if they do decide to borrow under the program.
Understanding the Nuances
For Real Estate Agents, becoming familiar with the advantages of a VA home loan program is essential to assisting military clients. As an example, the VA has a set of minimum property requirements (MPRs), though these primarily impact condo purchases. While some purchases are allowed, the list of condos that may be financed using a VA home loan is limited. The list is maintained online here, making it easy to identify potential issues before going under contract.
Helping Without Asking
Possibly the biggest barrier to helping active and retired military clients get the most out of the VA and other loan programs and incentives available to them is, in many states, veterans are considered a protected class. Depending on where you are located, you may be prohibited from asking questions about your clients’ military service.
An effective way of making sure clients are aware of these programs and incentives is to create a summary table of all programs, grants, etc. available to buyers in your area. This can be included in the welcome kit you hand your clients as they start to search for a new home. This way, you still provide essential information that may impact which homes they will be able to afford without asking for their military service status.
For more information on what you need to know to establish yourself as a resource for relocating military personnel and veterans, the VA has created a portal for you to use. Visit http://www.benefits.va.gov/homeloans/realtors.asp to start serving the military market in your area.