Today, Paula Christine is joined by Michael Fischer of Ross Mortgage. Michael is an expert in the field of VA loans. Often, veterans don't take advantages of these opportunities because either a) they don't know about them or b) they've received bad information.
A VA loan can often mean a zero down payment for recipients, provided they meet the requirements of using the home as a primary residence, as well as various criteria for their time served in the military. And this can easily be shown with what the VA calls an entitlement certificate.
Not only can a VA loan involve zero money down, it can also avoid PMI, or mortgage insurance, thereby lowering the rate.
Michael also dispels the myth that VA loans are harder to get or process. The numbers show no difference in loan approval rates between VA and traditional loans. In fact, many realtors and loan officers are not educated in the VA space, and this can cause them to pass bad information on to our veterans! This is why Michael and some colleagues created the Veteran Mortgage Advisor program, in order to educate service professionals about the benefits available to our military members.
VA loans are not harder to close, they don't take longer to close, and the inspection process is not harder. Michael explains where some of these myths come from and how he's trying to get the word out. He also has a class called "Present a VA offer. The seller will accept." This educates buying agents on how to explain the VA loan process to selling agents - focusing more on the bottom line for the seller.
Finally, a VA loan can actually be used as a way for our servicemen and women to build wealth. While a VA loan must be used on a primary residence, if you relocate to a different primary residence, you can rent out the first and buy a new one, provided you are under the lending cap. Michael explains the eligibility requirements and how this can be used as a wealth building vehicle for our military.
Want to learn more? Find a veteran mortgage advisor at https://www.findavma.com/
Or email Michael directly at MFischer@RossMortgage.com
Need help with your financial future? Learn more about Paula and her work at PaulaChristine.com or send her an email: Paula@PaualChristine.com
Paula: Welcome to Beyond the Paycheck. I'm Paula Christine. Stop living paycheck to paycheck and start living the life that you dream about by taking control of your money. I can provide you with the knowledge and the tools if you make the commitment to put them into practice. So today I've asked Michael Fisher from Ross Mortgage to come in and talk to us about VA loans when you're purchasing a home.
And I've always wondered, I know a lot of veterans don't take advantage of these programs, which kind of surprises me because I think there's some huge benefit to taking a VA loan. So welcome Michael.
Michael: Thank you so much for having me on. We just celebrated Veterans Day, so this is the perfect time to talk about this. I'm excited to get going.
Paula: Okay, so what is a veteran's loan?
Michael: A VA loan is a loan that is guaranteed by the Veterans Administration. The VA itself doesn't lend money. Banks and lenders do. The VA guarantees it and essentially allows the lender to make a loan that's perhaps more flexible than existing loans in the marketplace.
A lot of times veterans will find out that their VA loan could potentially be a zero down payment loan. It's great news for a lot of veterans that are trying to learn how to manage debt and build wealth. Does that make sense?
Paula: Yes, it does. I mean, that is a great benefit to be able to get a mortgage with zero down, but is there any special qualifications to get these loans?
Michael: Absolutely. A veteran has to be buying the house as a primary residence. They can't be buying as a vacation home, and the veteran has to be eligible. Their eligibility is based on their time and service. So whether a veteran was activated, served active duty, or whether they were in the Guard or National Reserve.
They potentially will be eligible after a specific amount of time. It varies a little bit based on the mode that they served in while they were in the military. And that's usually why it's good for a veteran to find a qualified mortgage professional or a veteran service officer who can help them learn a little bit more about that benefit and when they would actually get that entitlement from the VA.
Once a veteran has their entitlement certificate, then they can apply for a mortgage and learn more about what their options would look like on paper.
Paula: Okay, so in order to do this, they have to get an entitlement certificate first, and then they can go and apply for the
Michael: mortgage? That's correct. Now most lending professionals do know that they need that and will help them get that loan officer or a mortgage company that specializes in VA loans.
Is usually going to help them get that on the first phone call. In some cases, they can pull it up within minutes. With some of the veteran’s information, a lot of times you'll hear a loan officer say, Hey, I need your DD214. But in today's world, so many things are automated. Many times we can get it with just their birthday, social, and their name.
So it's exciting to talk to a veteran who for the first time is reaching out to learn how that benefit works. Many times they're not informed of their benefit, and they're not even aware that they could potentially buy a home without a down payment.
Paula: So are there interest rates comparable to an FHA or a conventional loan?
Michael: One of the biggest benefits of the VA loan is the pricing, oftentimes better than conventional mortgage. You'll find veterans end up getting usually a lower rate when they're comparing a conventional loan to a VA loan, and I say usually, because there's a couple circumstances where it may not be that depending on what's going on with the mortgage market, but for the most part, VA rates tend to be lower than conventional interest rates.
In addition, when a veteran is buying a house with a lower down payment, the VA loan does not have monthly mortgage insurance. Many folks know that as PMI or MI. So there's a huge chunk of that payment that doesn't exist on the VA loan, which, two things make the payment lower, lower rate, and the absence of mortgage insurance, give them a great deal on their monthly house payment.
Paula: All that stuff is really awesome. But you know, I hear often from veterans that they don't take advantage of it. Why don't they?
Michael: Well, oftentimes when veterans leave the service, they may not really be excited to continue working with the VA for the rest of their life, and they may be more excited about that separation than continuing to engage in the things that the VA has to offer them.
So they may not spend as much time learning about their benefits. We oftentimes say when we're teaching classes to real estate agents and veterans and even other loan. Veterans do not know their benefits. They're not taught by the VA. The VA doesn't really have an education department. And veterans, they kind of come to the community, to the real estate and lending community, us professionals, to hear more about their benefits.
And I think that's part of the reason that I'm on this call with you today is some friends of mine guided me over to you and said, Hey, you should talk to Mike, because Mike does a lot to educate veterans and real estate professionals about how they can better connect and talk about these things. I find that a lot of times real estate agents and loan officers.
They make a few assumptions about VA loans that aren't always true. One of the assumptions is that the VA loan might be harder to get through the process and that couldn't be further from the truth. So have you heard things like that yourself at all, Paul? When people are talking about VA loans?
Paula: No. Most of the times when I ask about them, they didn't even know they existed. So that's more the stuff that I, or somebody, will say, Oh, I did hear something about that, but I didn't go that
Michael: route. Right. So that brings up a good point though. A lot of veterans aren't informed by their real estate agent or lender about the benefit, and so you know, many cases they're actually talked out of it and it's because of a lack of knowledge in the real estate and lending space.
A lot of times, since it's a slightly different process, the lender or the realtor will shy away for everyone and say, Oh, you don't want to go that way. I hear those are more difficult. Just like anything that is slightly new or has a different portal or a different process, if you're unfamiliar with it, yes, it might be more difficult the first time, but nationwide, on average, VA loans close the same percentage rate as conventional loans.
The appraisals come back at the same percentage rate of value, and the overall turn time is the same, so there really isn't a perceptible, measurable statistical difference between getting through the process on a conventional mortgage or a VA mortgage rather. There are just some stigmas or myths in the marketplace that come from lack of education, if you think about it.
In most areas and states, the veteran population is somewhere around eight to 12% of the population. And if that population goes to buy a house, they're working with a standard real estate agent. That realtor, let's say they do six or seven or eight transactions a year, they may only work with one veteran. So it's something they may only come across once a year.
So they're less likely to be as knowledgeable unless they go out of their way to educate themselves, to learn to specialize. And the folks that do end up finding that the veteran clients are their best clients. They follow orders. They do exactly what the agents and lenders are asking them to do to get their house under contract, and they end up getting fantastic houses in many cases at high purchase prices.
Paula: I'm just overwhelmed by the shock of the realtors and the mortgage brokers who seem so uneducated about the VA loan, I mean, you would think they'd be wanting to do what's best for the client.
Michael: Well, some of the myths and misperceptions in the marketplace are based on some reality. And I've gone outta my way to teach this.
I actually created programs to teach all over the country to different loan officers and real estate agents actually teach it through a program called Veteran Mortgage Advisor. It's something that that I and some of my friends created where we're literally teaching real estate agents and loan officers about these myths and why they might exist and why they really shouldn't be myths, You know, one of the myths that we just talked about was like, this loan is harder. It takes longer to close, and statistically that's just not possible. That's an easy one to refute. There's lots of myths out there. For example, a lot of people think that the appraisal is going to be harder.
They think that there's a VA inspector. They think that the VA is actually doing the appraisal and all of those things have a tiny bit of truth. Yes, it's a different process. Yes. It's slightly different than the button you would click to order an appraisal for a conventional mortgage. But the appraisers that do VA appraisals are the same people that do conventional mortgages, USDA mortgages, FHA mortgages.
They have the same exact radius and comparable home rules. They follow the same codes that are pretty much standardized throughout the industry and they're not home inspectors. So it's interesting the perception is out there that the VA's gonna come to that house with a white glove because of a few words in the VA guidelines that say safe, sound, and sanitary.
I mean, who would wanna buy a house that's not livable, right?
Paula: Common sense.
Michael: Right. Well, it's common sense stuff, and generally if their house has a problem, it's gonna have a problem with any loan type.
Paula: Isn't it? The FHA that's a little bit more strict?
Michael: Typically the FHA property requirements are a bit stricter than the VA minimum property requirements, but I oftentimes feel that folks lump VA and FHA together.
There are different guidelines, there are different handbooks. VA is not FHA. And I think sometimes the my ht that flies around is because they're both endorsed through the government, the government agency called Ginny Mae. Folks seem to think that they would have identical guidelines. Now, VA is perhaps a little more strict than a conventional mortgage.
You know, like an attic and a crawlspace. The appraiser actually has to look in those as opposed to a conventional loan where they may not have to look in those. So there's a very small list of things that would be a little bit more restrictive on a VA loan. But what I've found is many times the folks that are extremely cautious about a VA offer are selling a perfectly good house that has almost nothing wrong with it, and there's many, many, many ways to work through repairs.
And that veteran can pay, the money can be held back and escrow for work after close. You can even call the VA and ask if that appraiser has gone too far. You can override the appraisers. There's all kinds of things that you could do. Most lending and real estate professionals don't know about because they don't necessarily take the time to study it and see what the differences are.
Does that make sense?
Paula: Yeah. So if you're the seller, is there a disadvantage to say to the seller that my client's getting a VA loan versus a conventional?
Michael: The only disadvantage to the seller would be if the seller is netting less money. So I typically tell folks, take a look at what you're gonna net. The only case which a qualified lender should close substantially quicker than a conventional loan versus a VA loan would be one where the conventional loan completely waives appraisal.
Conventional loans occasionally are doing that, very small percentage of the time. VA hasn't gotten to that point yet, although there is some legislation proposed to align the VA appraisal process 100% with the conventional appraisal process. But in the states I work in, I'm licensed in about 12.
The VA appraisal turn time is posted online, and we as lenders can hold those appraisers to that turn time by calling the VA and asking them to expedite things. Generally, the appraisal turn time is almost identical to a conventional loan, so turn time isn't an option, condition of the property isn't a problem, and the overall quality of the veteran borrower, in many cases, the demographic is identical to a conventional mortgage.
So there's all these reasons out there a seller shouldn't be afraid of a VA loan. Now, I think the biggest thing that comes up is that unfortunately, there's some lenders out there that I feel like they perhaps prey on veterans a little bit with all kinds of advertising. And then instead of spending that money that they get from the mortgages, training their staff to be high level pros, I feel like they've dumped it back into more advertising.
So sometimes you'll find that a veteran will come to a brand new loan officer who's sitting in a cubicle who really doesn't know a whole lot about lending, and then next thing they know they're working on a half million dollar transaction and it may not go smoothly. Then I end up hearing this anecdotal story about the bad VA loan that didn't go smoothly, and I oftentimes get to the root of the problem, which was that veterans get preyed on by some of these lenders and they end up falling with people that don't know what they're doing.
So I often say who you work with matters. When a veteran is working with a highly qualified, trained local lender that knows what they're doing, perhaps even someone that has the brand that I train unde,r the Veteran Mortgage Advisor brand, the odds of that transaction going offline are no different than they would be any other type of transaction.
Does that make sense?
Paula: Yeah, it does. But how do you find one of these veteran loans2?
Michael: Well, you just go to findavma.com. Find a veteran mortgage advisor.com, and I've got a list of folks that we've certified. The folks in our programs have gone through extensive training. Normally it's gonna take them 20 to 40 hours to get through our program.
Pass all of our tests. So that we know those lenders are calculating the income correctly, are making sure that the veteran has provided all their documents, they've checked all those eligibility certificates, they've verified all the normal things they would need to verify 'em about credited income.
And ultimately when the veteran's working with somebody that's a little bit higher level, they're going to have a very smooth, fast, transparent experience. So that's my main mission is to educate the real estate and lending industries on how to be better for our veteran clients because when a veteran works with a high-quality person, who they work with matters, and there's literally no difference to the overall experience with a conventional versus a VA loan.
Paula: Is there realtors that specialize in working with veterans too?
Michael: Absolutely. Yeah. There's realtors that will come to classes, like the classes that we teach, like in Michigan. I teach a class for continuing education called "Present A VA Offer. The seller will accept." And not only do we break down some of those myths, but we talk a little bit about negotiating skills as well.
How one agent on the buy side can convince the agent on the sell side to focus more on the net to the seller and less on the type of transaction, and also they can communicate to that listing side: Hey, We've got a really good lender that knows what they're doing. That lender's gonna call you and they're gonna walk through everything you need to know so that you know your seller is going to get exactly what we promised them.
So, yes, absolutely realtors can come to those kinds of classes. Any class that you see with the Veteran Mortgage Advisor brand has gone through our organization. High level, they know what they're doing, but in addition to that, real estate agents have some options at the national level. National Association Realtors, NAR, has a program called the MRP, Military Relocation Professional.
And that course teaches some things about the VA product and a lot of things about the military lifestyle, military relocation, helping veterans with their needs. Post-military. Just a fantastic program. It's usually a eight hour, one day type of designation course. But I find that the realtors that have gone through those types of training and have those types of logos.
Usually are better equipped to serve our veterans in active duty military than the other agents that haven't quite invested the time.
Paula: The education is important. So is this like a one-time loan or can you purchase multiple homes using the VA loan, or is it just one and done?
Michael: That's a fantastic question, and that is another one of the myths about the VA loan that we would talk about in the training classes that we do. And anybody that's listening, it's important to know that the veteran can use that benefit over and over. For example, if they purchased a house using their VA home loan, they paid that mortgage on time, then they sold that house, they can completely restore their eligibility.
The calculation the VA does is called the entitlement calculation, so they would restore their entitlement to full entitlement so they can go ahead and buy another house. Now, the really cool thing about this is that lenders and agents who've gone to higher level training actually know that in some cases, the veteran could have two houses at the same time that were financed by a VA mortgage.
The way they would do that is to understand that that allows up to a certain dollar amount, in this case, the dollar amount, just call it the county limit. Right now it's $647,200. If they own one house, that was, call it $300,000, and they turned that into a rental after they lived in it for a few years and they went to buy another house at $347,000 because the sum of those two was below the county limit.
They can actually have two different VA loans at a time. As long as both houses were bought and intended to be used as primary residences, the VA will allow that. So when I teach classes to loan officers and to real estate agents, I say, Hey, let's teach these veterans how to build wealth and manage debt.
Many of our active duty around the country do not understand that as opposed to using their housing allowance, which is called BAH, for rent. They could actually buy a house. They could even buy a two or three unit and have renters in it while they were living it as a primary on the base or at the area of the base, that they are stationed.
Then they could convert that house to a rental and move back to the community they originally came from. When they get out of the military, use their VA loan again and start building wealth literally when they're in the military. So this isn't taught at all by the VA. It's not taught locally at the VFW level.
It's not taught by financial planners, but you and I both know that owning real estate is one of the best ways ever in American history to build wealth. So that's why I keep seeing who a veteran works with matters when they work with real estate agents and loan officers that understand this and can teach them how to keep money in their pocket and leverage debt to create wealth from specialty real estate debt.
It can change their life. And so it's super important for veterans to know their benefit and to find people that know how to help them build wealth and manage debt.
Paula: I mean, I'm just kind of in shock because everything I heard is literally nothing that we've talked about today. I mean, I heard it was one time and, it was harder to get, and you know, most people were afraid to apply and it's totally all the opposite.
I'm just shocked how much bad information is out there.
Michael: That's why the forces of Good have put us together and talk, right?
Paula: The forces of Good. I love that!
Michael: I have been screaming this message at the top of my lungs all over the country, teaching anybody who will listen. And if there's a loan officer that's listening, you know, veteranmortgageadvisor.com or find me Michael Fischer.
I'm easy to find in all the loan officer Facebook groups. Lots of loan officers know who I am. If it's a real estate agent in Michigan, and they wanna attend one of our courses. If they see the veteran Mortgage Advisor logo, or if they see me teaching a "Present a VA offer, The Seller Will Accept" course. They really need to come, because some of these myths were just maybe based on some stuff that happened 10 or 15 or 20 years ago, or are there because people don't do enough VA transactions.
But when the lenders and the realtors go a little higher level, learn a little bit more and understand just the differences. I'm not even gonna say complexities or roadblocks. They're just differences in how the product works. The actual execution of the VA loan application to close should go just as quickly.
I know in our company that I'm very active in training. The folks that led you to me, are from the same company. The company I work at Ross Mortgage. Our VA loans close just as quick as any other product. So there's no reason to fear them. But that's not the same in every company because not every company has jumped in and said, “We want to be good at these.”
We think it's our duty to serve those who serve us by at least understanding how to help 'em with the things that we're supposed to be good at, real estate lending. So that's our way of giving back is just by mastering our craft. Anybody who wants to come along with us, we will gladly train or teach them. And heck, I make the majority of my money writing loans.
So if somebody wants to apply with me personally, Michael Fischer, you can look me up. You can email me at MFisher@RossMortgage.com. I'm here to help and I help as many people as I can every day getting on podcasts and video and things like, Help me get in front of more people to spread this message. So I'm so appreciative of you guys having me on today.
Paula: Wow. I'm very appreciative of learning all this stuff. I will be spreading the word too every time I talk to a veteran that they should look at the VA loan and realtors as I talk to 'em. I mean, great information, Michael. Again, I'm just really surprised that more people aren't taking advantage of this loan.
So, Michael, I wanna thank you and Michael's contact information will be in the show notes. And if you'd like to talk with me, you can reach out to me@paulapaulachristine.com, or you can check out the website at paulachristine.com. So next week we are going to be talking to Shannon Dewall again, she's our estate planning attorney who's gonna talk about the disability trust, the special needs trust, and who needs them and what they're all about.
So again, thank you Michael. I really, really appreciate you being here today. I've learned so much.
Michael: Thank you, Paula. It's been my pleasure and anything we can do to help a veteran utilize their benefit, build wealth and manage debt, that's a hundred percent what we're here for.
Paula: Thank you again.