Service members and veterans may not be getting the most out of their VA housing benefits due to misconceptions about their lending options.
A new report from Navy Federal Credit Union suggests that military families have misconceptions about VA home loans that could keep them from saving on their mortgages.
Nearly all respondents were aware that VA loans existed, but almost half did not know they tend to offer low interest rates, and 55% believed a down payment is required, which is not the case.
Respondents tended to rely on personal research or family members rather than talking directly to official VA or other military resources, possibly exacerbating the high volume of misinformation.
But those who had used a VA loan reported high satisfaction, and nearly all would recommend the process to other military families.
“For Active Duty servicemembers, Veterans, and their families, VA loans can provide crucial benefits on the journey to homeownership,” said Christopher Davis, assistant vice president of residential lending at Navy Federal.
Navy Federal Credit Union is the world’s largest credit union, is member-owned and not-for-profit, and is open to all Department of Defense and Coast Guard Active Duty, Veterans, civilian and contractor personnel, and their families.
David Smith, Vice President of National VA Lending at loanDepot and a former U.S. Army sergeant, said that both veterans and real estate professionals could benefit from learning more about VA loans.
“Unfortunately, too many veterans, as well as too many real estate professionals, don’t have the understanding they need to successfully utilize VA loans. Our mission is to inform and empower so that more of our country’s servicemembers — who have sacrificed so much on behalf of our country — can take advantage of the powerful benefits of the VA mortgage program,” Smith said in a statement.
Veterans and military families have unique needs and often a fixed income, making the dream of homeownership harder to reach. At the same time, the difficult housing environment of the last several years has put many in a tough position.
Montana, for example, has one of the largest veteran populations per capita of any state in the nation. During the pandemic, there were veterans who purchased properties in rural areas where values spiked with the influx of new residents. A veteran who purchased a property at peak pricing in 2021, for instance, may unfortunately find themselves in a position where they owe more than the current value.
“This doesn’t apply to the entire state, where values have continued to appreciate over time – but in more remote, less popular areas – it is a significant risk,” Shaun Michael Lewis, CEO of Clearwater Properties in Montana, told The Mortgage Note.
A second way veterans are finding themselves falling behind is when they have a limited fixed income, or when their income is solely based on service-connected disability payments.
“This person, who is often already in a perilous financial position, may experience an unexpected expense (car break down, damage to the home not covered by insurance, a medical issue, etc.) that derails their ability to remain current on their mortgage payment,” said Lewis.
