Buying a home with partial VA eligibility... Yes, you can.
There's a myth among many military veterans that VA financing is a one-time privilege... i.e., if they ever used it to purchase a home in the past, VA financing is no longer an option for them when purchasing another home. That's not entirely correct.
There are some circumstances when you may be eligible to use VA financing again:
- The home you purchased with a VA loan was sold and paid off in full when the buyer obtained new financing. This describes many retired military folks living in Crofton and throughout the Baltimore-Washington area.
If this is your situation, you may be able to buy a new home now with no-money down VA financing without selling your current home to restore your VA eligibility OR access current equity for a down payment on your next home. - The home you purchased with a VA loan was sold with the buyer assuming your VA loan AND substituting his/her VA eligibility for yours. This occurred often in the 80's, when interest rates sky-rocketed to more than 15% and VA buyers assumed lower-interest rate loans rather than getting a new one.
You may now be able to buy a new home with no-money down VA financing without selling your current home to restore your VA eligibility OR access current equity for a down payment on your next home. - The home you purchased with a VA loan has been paid off or re-financed, so your VA loan has been paid in full - yet you still own the property.
Even though you still own the home purchased with a VA loan, your eligibility is no longer tied up with a VA loan on that property. You may be able to use it for the purchase of another home, even if you don't sell your property to access your current equity for a down paymenet on your next home. - The VA eligibility amount has increased since you used VA financing to purchase a home. Even if you have not paid off the balance of that VA loan, you may be eligible to use the added VA eligibility to obtain another VA loan; this most likely will require a down payment on your part, but the terms could be more desirable than a Conventional loan in some cases.
Explore this option with your mortgage lender to find out exactly how much VA eligibility you may now have. My husband and I used this option several years ago, since the VA eligibility amount increased substantially between the time we purchased our first home with a VA loan and the next time we purchased with another VA loan (without selling our first home).
Since many people depend upon the equity in their current home for a down payment on another home, selling before buying is required. If you qualify for a VA loan, however, you may be able to get no-down (or little-down) VA financing on your next home - and that means you can keep your current home and convert it to a rental property.
This strategy worked for many home buyers during the Buyer's Market of the early 80's, and it could work for you today.
You owe it to yourself to find out for sure whether or not you qualify to use your VA Eligibility again, if any of the situations outlined above describe you. It's probably the best way I know for you to take advantage of today's $6500 tax credit (until April 30) and Buyer's Market pricing.
If you're located in Crofton MD or anywhere in the Baltimore-Washington area and you are active-duty, honorably discharged, or retired military, you can contact me for referral to a VA loan expert who can help you determine your home financing options.
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For answers to your real estate questions about Bowie, Crofton, Davidsonville, Fort Meade, Gambrills, Odenton and other communities in Anne Arundel County, Maryland, contact Margaret Woda at Long & Foster Real Estate, Inc. or simply click on a button below for information you can review online at your own pace:
Yes they can! Great info for the vet Margaret!
I forget to ask if they have VA benefits it can be a great option for them.
From the desk of David Dee,
Margaret, the nice thing about the VA is the no money down. It's a great program.
Sally - I can't tell you how many people I helped in the 80's Buyers Market with this strategy... this time around, I feel like this message isn't getting out - which is a huge waste of opportunity, given the many retired military in this area.
Terry - Many people don't even realize they have VA benefits now after using them back in the 70's or 80's. The question we really should ask is whether either of the buyers ever served in the military and, if the answer is yes, then running down the various circumstances outlined in this post.
David - You're absolutely right. Not only that, VA financing is sometimes desirable with a downpayment. We did so, and avoided PMI for a 5% loan - and now that the norm is 10-20% down...
Margaret, VA financing was not something that would have been seen in our state very often until the government started activating the guards and reserves. I have had 4 of them in the past 5 months, and hopefully will see more over the next few months.
You are right...many people do think that the VA loan is a one time option. Thanks for the post!
Great info Margaret! Thanks for reminding folks. I have done several in the past year and they are much easier than I thought they would be!