Why Veterans Are Dumb When They Use The VA Home Loan - According To Dave Ramsey

Everyone always has something to say about using the VA home loan, especially those who have millions and millions of dollars and they can just say what they want. So today we have David Piatek with us and we are going to be watching and listening to what Dave Ramsey has to say about veterans and service members using the VA home loan. David, go ahead and introduce yourself while, while I pull up the Dave Ramsey clip. Yeah. Thanks again for having me. I'm Clayson, David Piatek. If you guys haven't checked out my channel, VA housing education, all related to the VA home loan, housing, and current trends, kind of what Clay does in the veteran disability space. But this isn't housing because y'all need a place to live. Yeah. And we can also use our disability compensation, um, wisely. Right. Use it wisely. Don't buy stupid things. Now I do love buying stupid things, but let's go ahead and listen to what Dave Ramsey has to say. This is a four minute video. We'll pause in between and kind of break it down. I need one of those. Tyler is in Colorado Springs. Hi, Tyler. Welcome to the Ramsey show. Hey, how's it going today, Dave? Better than I deserve. What's up? Uh, I'm kind of in a funny transitional state in my life. I'm getting ready to transition out of the military and I'm looking at living options once I get out, I'm going to go to college on GI bill. And I've been really struggling with whether or not I should rent or try to buy a home. But in doing some research, it doesn't seem like there's any way that I can get pre-approved for a home loan. And I understand that you hate VA loans. Can you, can you clarify as to. I have a question for you, David. And I'm pretty sure I know the answer when it comes to pre-approval on VA home loans for those who are active and looking at transitioning to becoming a veteran, what does that look like? Are you able to use your active duty paycheck? Yeah. So this is a good question. It's somewhat complicated because everyone's situation is a little bit different and it also depends on your rank, ironically. Okay. So when you're buying a house and let's say your ETS is within a year of purchasing, which is for enlisted because officers don't have an ETS state. Right. And let's say like you're stationed at Fort Belvoir and you're looking to buy in that, like, you know, one hour radius around Fort Belvoir or onto hour and a half, uh, you're more than a year out. It's pretty straightforward. You're an officer. Basically they're, they don't know what your ETS state is and you can purchase a property. If you're transitioning, then typically you need to have a job lined up for your transition. And the job typically with an offer letter needs to be cleared of any contingencies, which is pretty tough to do. Um, the other thing that goes with that is that sometimes veterans will want to move to like, let's say a different state, uh, or, you know, wherever, then it also makes it a little bit more complicated where almost you have to transition completely out. Another thing to that is that if you have VA, if you don't have VA disability compensation yet, right. Like you're working through it cause you're trying to get out and you're still gonna have to pay the VA funding fee and you won't get a refund on that. Awesome. That's so one, the answer that I thought I had, uh, was wrong. And this is why we have David Piatek on. I'm not even going to share what I thought it was. All right. Let's get back to why. You, you hate VA loans so much and also what your best advice is to me. Hate might be a strong term, but, um, but number one, the VA loans are more expensive with fees and interest rate than any of the big three FHA, VA, or conventional number two, VA loans. The reason most people gravitate. Yeah, I know just how he said, like they're more, you know, VA loans. And then he said FHA, VA and conventional. So just kind of keep something in mind on this to a degree. He is correct because veterans use, I think a lot of the big, you know, banks that focus in on the veteran community. And I just dropped a video on that. There's like over 416,000 veterans purchased a home or like did use the V loan last year. And they overpaid for their own benefits about $155 billion. Now, if you guys want to give me $155 billion for the year, I'm cool with that. Right. But most people aren't right. It's on average veterans overpay about eight grand, but you don't have to pay those fees. Uh, so a lot of times we save people a ton of money, but just be aware of when you're looking at these loan estimates, uh, fee itemizations, because to a degree they are more expensive because of origination fees and discount points, veterans get paid. And like I always say, if you're being marketed to, and you're calling somebody, you're paying for that marketing. All right. Number two towards a VA loan is you can get a, as you know, you can get a house with nothing down. Yeah. And that's, which means you're too dead broke to buy a house. Okay. When you buy a house with no money, a house is not a blessing. Okay. And so, cause you know, the air conditioner is going to go out next week. Okay. So I want you to have a house. I just don't want it to have you. So that that's the reason I don't, I don't. It causes people to buy a home and when they're in a position of weakness. So I'll say something about this. Um, I think I do agree with him that it's such a weird spot though, because if you're going to rent, you're paying a mortgage, it's just not yours, right? You're, you're, you're paying regardless. It doesn't matter unless you're going to live with your parents. Right. But who wants to leave the military or even now as a veteran, you know, I can't imagine calling my mom up and saying, Hey mom, I need to crash in your basement with my wife and my four kids. Um, I can't imagine doing that, but I do see his point about if you can't, if you have no money down, then you are broke. And what you don't want to do is become house broke, right? Because when the AC goes out, like he's implying there, um, you're going to have big problems. What are your thoughts on that? So it's, it's a double-edged sword. Cause in one sense, like, I'm going to give you a real life example. If you in 2000, you know, 2020, 2021, where rates are really low and then you're like, Oh, it's too competitive. I'm not going to buy a home. Guess what? All those people right now are like, Oh, the home values went up like couple hundred thousand interest rates are higher. I could have been in an affordable housing position. Now I'm not. And so affordability comes down to each individual. And I'm going to explain why, because VA loans are extremely flexible. So you can really make yourself house poor, right? That like a lender is not going to say, Hey, this is, you can't, you know, Hey, this is too much for you. You can't like, if you, uh, let me backtrack that if you, the max they'll tell you is the absolute max you can go up to, which by the way, it's like very high typically, and they almost leave you with no money on the max end of your budget. Okay. So you really have to know what you want to purchase a property for. And if you wait long to save up money for a down payment, like that's not good. Like your home values continue to go up year over year where you should be is saving money for emergencies and then buying a home and leveraging the VA loan. But again, everyone's situation is different. You have a, let's say a hundred percent VA home loan. You have a 10% or greater VA disability. You don't pay the funding fee, but let's say somebody that doesn't have VA disability, then it may be an advantage to put money down because you pay a lower VA funding fee if you put down at least 5%. So those are things that you want to consider. Uh, but having money set aside for, uh, emergencies or things going out that's smart, but again, if you're not putting money down, typically you should have money in the bank for that reason. Right. But yeah, to your point, like if you're paying rent, you're paying someone else's mortgage. Yeah. You're you're paying, unless you're living with your mama right now. Uh, my mom would probably love me and my kids to live with her. Um, at least for a short term, you know, but I can't do that. I can't do that. Okay. Rather than strength. So what I would tell you to do is, uh, rent the least expensive thing that you can and let's work on your career and work on your goals and build up some money. Okay. So then in that case, that leaves me with one of two options. I can either live with my parents for $350 a month, which yes, that's awesome. But how long have you been in the military? I've been in the military for nearly five years. When I get out, that'd be really painful. Yeah. And, and my parents, I love them to death, great people, but it's, it's, it's difficult to live with them. And so my next option would be, um, would be renting a apartment for about 850 bucks a month. Yeah. Try to get your roommate situation where you can get that cut down, but you don't need to be back at home. It's just, it's emotionally going to be destructive for everyone involved. Okay. And with that though, I guess, you know, I will say this, David, um, I don't know this person on the phone, but I don't think he also, I don't think he understands what's about to happen. So one, I'm just going to assume he gets a job at 50 grand a year. I think transitioning military 50 grand a year is totally possible no matter where you are in the States. And it's probably higher depending on his background, right? Let's say he was an Intel field. He goes to government contracting. He's going to be making a lot more, but I don't think he understands that he's about to start pulling in BAH from the GI bill, assuming he goes full time. He's about to start working. And then there's this VA compensation that also assumes he's going to apply for VA benefit. There's this pool of VA money that I don't think he understands what he's about to be entitled to. Um, and my question for you is, do you ever run into veterans that, that aren't rated for VA? They're not rated at all. They want to use the VA home loan. And have you ever seen, have you ever asked them, Hey, why, why haven't you gotten rated? Yeah. And about, uh, about 45 minutes ago. Yeah. I'm not joking. Like, and so, so, you know, I have a mix of people that reach out, right. So people from the YouTube community that reach out and then I have like, just like low, like in local real estate markets that I work with. So I talked to this lady and, and I asked her, I'm like, do you have a service connected disability rating? And she's like, well, I, I, the way she said it was like, I, I denied my disability and I was like, I'm like, I'm not sure what you mean. And so when she was transitioning out of the military, she had a child, single mother, she had to work and she was going to, she wanted to go to school. So as soon as she transitioned out, like they made appointments for her to go. She just couldn't go like just life. They couldn't just be like, Hey, I deuces. I got to go, you know, cake, child, baby, you need to take care of yourself. And so I do run into people that it's like, it's almost like they don't, it's not an excuse, but it's like, it's real life, right? Like something's happening. They can't do it. I run into other people, that same thing. They're like, I want to do my V disability rating, but I just, you know, my work is so demanding. I can't just take out because like what they give you like a two week window. You give them a rough time. They're like, Hey, this is when you're coming in. And then you have to ask your employer to take off. A lot of people don't have that flexibility to do that. Um, and then others too, like I just had a gentleman, uh, from last week was like, I was in the Marine Corps and 10 years later, I didn't even know that I can file for VA disability. Uh, he's like, I went and did it and got to 90% just on his own. So he kind of found my channel and then started following you guys as well. Awesome. This is the way, right? So like, yeah, we definitely come across it, which this is why also, I think like doing these collaborations is awesome because it kind of puts it out in front of like a lot more people to just be aware of what's like, what are your options? You don't know what you don't know. All right, let's go ahead and get back to this clip. And, um, I have some extra money in the bank that I could use to float myself on the months that I don't get paid by the VA for the months that I don't go to school or summer break or whatever. Um, but can you not work? I can work. It's going to be very part-time. I do plan on getting a part-time job. I actually have a job lined up already. Uh, as soon as I get out. So what are you going to study and how long is it going to take you? Uh, I'm going for a construction management degree. Uh, and it's going to take me four years to get my bachelor's and I should graduate by like 20, 26, somewhere in there. Well, I graduated in four years with a business degree from the university of Tennessee and I worked 40 to 60 hours a week, every week. Okay. He's such a douche bag. I mean, that's the only way to say it. That was very, um, condemning. But the thing with that is man, is that I talk to people that are, that do work full-time and they go to school full-time. Like that is something real. Um, I definitely, and it's, and it's a lot of people surprisingly. Um, I think, you know, they're not like 18 years old going like, Hey, I'm, I'm going to a full-time college. I'm going to go party. I think that's the mentality that people have. A lot of times veterans that are going back to school that I talked to them. They're like, yeah, I'm like in my later twenties, early thirties, I'm getting back, getting a master's degree. I'm getting my whatever degree that I want to get into bachelors, associates, whatever, uh, which by the way, if you don't know, they did expand the GI bill benefits. So if you have multiple tours, you actually have more schools. So you need to reach out to the VA and see if you're eligible for more benefits. If you've exhausted your benefits, no matter who, no. Um, but the thing is, is that, yeah, just be tracking on any changes that are happening. Yeah, we won't, we won't go ahead and finish this clip. Cause I'm, I'm pretty sure it's about to go on the education rant, but I will say this, I worked full-time as I was a contractor for the federal government at that time. Um, I went to school full-time and it sucked dude. So my Tuesday, right. My Tuesday was, I would work from about eight to five. I would leave my office, go on to my classes were either on Delvore or Fort Myer up in Arlington. And then from six to nine, I would be in class just wanting to blow my brains out. Hence the disability rating. So, um, it's up dude. And I did that for, I want to say two and a half years cranking it out. I'm currently I'm back in school full-time using my expanded GI bill benefits. Well, they'll, they'll kick in next month. That's awesome. The new 12 months it's for veterans who have two, um, terms. So two, four year terms and, and you had to pay into the Montgomery GI bill. And if you meet that criteria, then you fall under the root of sale. Um, Supreme court decision, which expands your 36 month GI bill to 48 months. And yes, you can get that to dependency. Anyways, that's all I got, David. I think this was a great episode. Do you have any last parting words? Yeah. Never disqualify yourself. Always reach out. I mean that we see that way too often. Uh, there's a link down in the description schedule call with me. And again, like you want, if you want to see everyone's interested in real estate, check out the channel VA housing education. That way you get up to, uh, up to date information. And then we also do a ton of live events together, just kind of going through like what's happening. I know we'll be doing one here towards the end of the January talk, uh, talking about the big transition that's happening and kind of the impact that's going to have on the veteran community. So we're going to give it a couple of days, uh, to kind of let things buff out. And then, um, we'll do another live event. All right. Cool beans.