Sticking to a Housing Budget: Smart VA Loan Home Buying Tips for Veterans

What's going on guys today, we're going to talk about, uh, your budget and other people not respecting that budget. And it can range from your family or spouse. Really budgeting is the key to having financial freedom. And for a lot of people, they focus on other things like the emotional aspect of purchasing a property, trying to stretch a budget because they are impressing somebody or compromising on that financial stability because they're also thinking of like their forever home. Uh, so we're going to break some of those things down. What is real? What's not because at the end of the day, you're the one that's making the mortgage payment, not me, but you really have to understand, uh, the dynamics and then what really happens. So the first thing I want to talk about is the emotional aspect of buying a home versus the financial side of it. I feel like the folks that we help, majority of the time, there's some type of drama that goes with home ownership. It can be either from, you know, making an offer on the property, but you lose out on the property and you miss out on that dream home of yours. Um, or you might be in limited inventory and same thing. It's just very competitive. Now we're kind of going into the spring, uh, spring and, uh, spring, summer, fall markets. It's really the hottest time of the year to look at home ownership. Uh, so it just really kind of depends too on what your financial picture is to really get into that. So a lot of, uh, emotion goes into home ownership and buying that property. Uh, cause also just looking at something, falling in love with it. And then also just then, you know, maybe finding out that the home isn't gonna, uh, it's going to have issues on the line because you did a home inspection, which we always recommend. All those things are huge factors when it comes to home ownership. Another part of this is also going to be the social pressures of purchasing a property. Now, you know, there could be your spouse. That's like, Hey, we want to be able to buy something bigger. We need more space or whatever the case may be. You have friends, family comparing people to each other. Like, Hey, they have a bigger home. We want a bigger house. But again, at the end of the day, you're paying for that. Uh, not them. Um, and really that's why focusing in on your personal budget, which you feel comfortable making on a monthly payment, uh, and making it that your decision. Now, if you have VA disability compensation or you're thinking about filing for it, know how your particular County and state works when it comes to applying those benefits and how they work, because every area is a little bit different. And I see too many times veterans get off, get caught off guard, uh, by that happening. Now, one thing I want to touch on as well is going to be the desire for more space or better amenities, or really talking about that forever home when it comes to veterans becoming homeowners and really going outside your budget. And sometimes it can make sense. I'm going to, I'm going to say that, but I'm going to back it up with a couple of things. Uh, after we talk about this, uh, this piece, you know, space is a very important thing because you don't want to get in a situation where you may feel that you're going to outgrow your property sooner than later. And then what I mean by that is that you really need to own a property for a couple of years in order to at least even just break even unless you have some kind of, um, an event happen, maybe that would drive values up high or fast. And that's pretty hard to predict in my opinion. Um, but let's say if you're looking at a two bedroom, two bathroom property, but you know, you have maybe a kid in the way, or you got family, that's going to be staying with you, whatever the case may be, maybe a two bedroom, two bath may not make sense for you to purchase. You really need to get to a three or four bedroom, two bath, maybe have a full basement, whatever the case may be. But you want to think that at least through the next five years and also the, uh, being able to resell a property, right? If you look at, let's say people that buy a one bedroom, one bath condo or a studio condo, those are a lot tougher to sell than having multiple bedrooms and bathrooms in a property. It's just, it's just a given on that aspect. Amenities play a big role as well into homeownership and what people look for, especially with HOA dues. Uh, if you're looking at like condos or plan unit developments that have an HOA, those things like having, uh, maybe a male person there or all everything being taken care of around the property for you is a convenience factor. And those are things you have to think about because otherwise you're your time that you're spending doing that. Now, let me touch on the forever home. Forever home is when someone is like, Hey, this, we're going to buy this place. We're going to live it forever. And a lot of people have that same mindset. Even myself. Now the average time a person lives in a home is going to be seven years. And obviously with rates have a pistol being historically low. A couple of years ago, uh, we have, uh, the market hemorrhaging somewhat. That's why we have limited inventory, but more market, uh, inventory has been coming on the market as well, which is easing up a lot of things. Cause I think people are realizing that, Hey, we bought a property and this isn't just gonna, this isn't working out for us because it's just too small. We have to bite the bullet and take a move, um, uh, on that piece. Now, you know, where it can make sense to purchase a larger property or maybe go over your budget. And this is something that, you know, we have real conversations about with people. One thing you want to think about is if you're buying a property that needs renovation work and you know, this is kind of like my personal situation as well, but we talk to people every day about this as well. And so let's say for example, that, uh, that an area is selling for, you know, average homes for three bedrooms, two baths is let's say 400,000. Cause that's what the average is across the country right now. Obviously you could definitely get into homes with cheaper than that or way more expensive than that. That's really up to knowing what your budget is and what you're comfortable with on the monthly payment. So let's just say $400,000, kind of like the medium area purchase price. Okay. And somebody comes in and they do gut rehab on a property. Uh, they make it, you know, everything that you want it to be. And let's say that same property is going to be selling for four 50, but fully renovated everything to what you want it to be. There's a couple of things. One is going to be a payment difference in what your monthly payment is going to be, which affects what your overall qualification is going to be, right? So you have to be also qualified for this. But the other big thing is going to be is if you find a home that let's say the average condition of a property at 300,000 is not suitable for you. So if you were to look at that same property and say, well, if I put a X amount of money into it, it will be get, it'll get me to this same property, right? This is kind of the mindset you kind of go in with it. And so, you know, I'm assuming that it's going to cost you more money to try to get a renovation deal than buying over to your rehab property. But again, that's why you have to look at the numbers to see what makes sense. And if you're planning on doing the renovation yourself, also you got to think about how your finances are structured. Because if you say, well, I have 50,000 to dish out because I can make up that difference and I can make it my style. Cool. And you're good with that. You're good to go. But for a lot of people, they really don't want to do the renovation work. And I a hundred percent agree with it because I'm going through it myself right now. It is a, not a horrible process. It's a daunting process because there's a lot of things that you have to think about and you have to get that you normally would never think of when it comes to just even picking out tile. Like that is a process in itself, unfortunately. Now let's talk about a little bit about your financial responsibility and kind of how all this factors into your employment situation and some of the things that come up with homeownership. So one, you want to let's talk about stability over both the short term and long term. Everyone's financial picture is a little bit different. And if you guys want, please schedule a call with me from a lending perspective. Happy to walk you through all this because there's just so many factors that go into homeownership and I want to be able to break that down because again, each person's situation is different. Think about your employment stability. That's number one because you want to ensure like, am I going to be continuing the job that I'm at? Hey, if I'm, am I on active duty? Am I going to PCS somewhere? What am I going to do with my current property? Do I want to lock in my VA benefits or not? We talk about all that on the channel. Go to the channel, go in the search and you can pretty much search anything that you want within it. And if there isn't, if it doesn't exist, drop a comment and I will create a video all around. Unexpected cost of homeownership is a really big one that unfortunately I get a lot of calls from past clients with like, Hey, we purchased the property a year ago. Also in the water tank went out. Now we've got to drop two grand with installation or 2,500 depending on where you are to be able to get this up to leave. So understanding that your budget also understanding your savings because you're going to have things that come up, uh, going to come up for you. Let's talk about how to set that budget and everyone's budget is going to be a little bit different because everyone's financial picture is going to be different. One thing that I'll touch on briefly, and I did a whole video on this talking about how your VA disability affects homeownership. Your VA disability compensation can be used right away. Um, but your VA disability, let's say not paying property taxes in some areas can take two years to kick in. That can be a problem because you have to hold it, but sometimes you're able to qualify without that, um, taxes. But again, at the end of the day, that can be a burden on you because you do have to come up with that money on a monthly basis and really understand how those taxes are going to, uh, are going to work. Because again, you don't want to put yourself in a financial bind. Um, especially when it's you, well, it's what's your livelihood on the line because you don't want to have late on you on your mortgage. Another part that you want to understand about your affordability is that when you, let's say if you've been renting a property, but you want to go to a single family property and you've been renting, let's say a condo, a plan unit development, and you go to a prop, a single family, the cost of utilities typically is going to be a lot more. Cause there's a lot more to heat. There's a lot more to cool, a lot more things that are just going to go into that homeownership piece. Like maybe the roof, all those things are factored in. Another thing that you want to do is be able to assess property taxes and insurance. And I just did a video on that on how mortgage payments go up. So you really need to dive into it. And it's all at your, uh, it's publicly available information. So you can go in and see what trending taxes have been doing. Uh, and you can ask the homeowner how much they pay in utilities. Also just gives you a good idea of those expenses going into it, especially with the VA loan, because the VA loan itself, uh, has primarily, uh, what's called a residual income component to it, which is very low, right? So a family of four in the Midwest is like a little bit over a thousand dollars. That's your net take home, not including car insurance, groceries, and none of that. You got to factor that in because it's going to affect what you can afford, uh, in, in the long run. And where do you set the percentage of what your mortgage mortgage payment should be to your income? Again, it's what you're comfortable with. For some people, they want to go to a bigger property. So they're willing to spend the money. Uh, and what they do sacrifice is, they don't really go out. They don't do things, but that's in their nature. Other people are like, I love to travel. I want to go out. I want to do things. So they opt to go for far lower payment, uh, qualification than what they actually qualify for because they understand their lifestyle. And that's something that you as an individual, uh, need to understand, uh, understand that. And when you're trying to stretch your budget, because let's say you, you know, valid ish reason is where you, Hey, I might be a disability. It's going to kick in. I'm comfortable to make sacrifices in the short run to be able to get to, uh, so I don't have to like buy and sell because we're gone. We are, we want a bigger property. And you also want to stay away from living for a paycheck to paycheck and having flexibility for emergencies, travel and home upgrades, or just general, uh, repair for that. And, you know, sometimes, you know, I'll touch a little bit about families, uh, and everyone's situation again, different, but sometimes people have their entire families go and look at properties and everyone's making a decision together. Uh, so it definitely, uh, add some cloudiness to this process because, uh, you know, you're not factoring a, let's say family members finances into qualifying for the V loan. Yes. You can do a V joint V home loan application, did a video on that as well. Uh, but it's not as advantageous because you do have to put a down payment then on the property. And also, you know, what if they end up not living with you after a short period of time or a long period of time, now you're stuck making those payments and having all of that that goes with it. So make sure you're having those discussions upfront. Uh, and if you're already in it, like right now, I would definitely, uh, just take a step back, talk with, with, with everyone, talk with your spouse, talk with your family and look at the reality. There's a longer that you wait to become a homeowner, right? Historically speaking, the higher the cost is over time. So you don't do yourself a favor by waiting longer or trying to get to that absolute perfect house. That means you're not buying a house. And then all that means is when you're trying to buy a house later, the home values have gone up significantly more historically again, not guaranteed. And then again, you are going to be in this vicious circle of not owning a property and just making someone else richer by paying their mortgage by renting a property. So those are all some, uh, some good takeaways for you guys to have when it comes to this process. If you guys have questions, please drop a comment below. Always happy to help and walk you through that process, especially when it comes to new videos. And, um, but again, the link of the schedule calls to be down below and I'll get you guys.