Couple Buys on Westside With No Money Down, VA Financing : <i> Buy property with nothing down! Low interest rates! Great loan terms! Low closing costs! Especially appealing to first-time buyers! No add-on charges! No hidden fees! : </i>

In the world of Southern California real estate, those promises sound too good to be true. But they are the major advantages of using a Veterans Administration loan to buy a home. (See story on Page 8.)

My wife, Lisa Whitwell, and I bought our first home last summer, a condominium on the Westside of Los Angeles, with only $3,400 in cash, using VA financing. If you or your spouse qualifies for a VA loan and you’ve ruled out that option, you’re ignoring one of the most valuable weapons in the real estate war, especially if you are a first-time buyer.

With the VA, you can buy property with no down payment if the price does not exceed $144,000. And while that might look like a limitation, considering the steep home prices here, it can be a great way to get your foot in the door.

My wife and I began our house hunt at the onset of 1988. We were getting tired of writing rent checks every month and we had a good amount of combined income, but we were having trouble saving up a down payment.

We were living on the Westside and wanted to stay there. We quickly found out that we had two main options--we could wait until we saved up $20,000 to $30,000 to cover a down payment and closing costs with traditional financing, or we could use the VA loan that Lisa had qualified for through her service in the Navy.

We pressed ahead with the VA loan, and five months later we signed to buy a two-bedroom condominium in Culver City for less than $125,000.

If you’re thinking that you don’t want a condo or a townhouse--the properties most likely to fall under the $144,000 limit--and say you’d prefer to wait until you amass enough savings to buy a house, think again.

In the last nine months since we closed on our condo, the property has appreciated 20% and we’ve made more than a 700% gain on our initial investment of $3,400.

Sure, our mortgage payments are higher than our rent payments were, but we’ve also enjoyed significant tax benefits that have enabled us to keep more of our income.

Today we’re in a much better position to shop for our first house, the ultimate goal of most people.

Now that you know the advantages of a VA loan, here are a few tips that might help you overcome the obstacles of trying to use one.

Finding an Agent

The first challenge will be finding an agent who will work with the VA loan.

We hit brick walls with many until we stumbled upon Diane Fisher at Century 21 Horizon in Culver City, who was used to VA deals. She greatly aided our search and wound up with the commission that several other agents had passed up.

Fisher, who has worked in real estate in the Southland for 10 years, explained that representing the buyer in VA transactions comes with added responsibilities.

“It’s up to the real estate agent to educate the seller about VAs as well,” she said, noting that some sellers will resist offers backed with VA financing because of the costs the seller has to absorb.

By educating sellers on the various ways VA deals can be structured, more are willing to work that way, she note.

If you can’t find an agent with VA experience, there’s another way to approach the situation, according to Jerome Fox, a broker who has worked in real estate for 25 years and who teaches real estate at West Los Angeles College.

“Find an agent who is newly licensed (and who) needs the business and might want to work with you,” he suggested.

Scan Newspaper Ads

Finding the property comes next.

Scan the classified ads in the newspapers while the agent searches through the multiple listing service. If you find a property that exceeds the $144,000 limit, you can still use the VA loan, but you have to come up with the difference as a down payment.

Once you’ve found the property, line up a lender and an escrow officer who are familiar with VA transactions. That will help the closing go more smoothly. Finding the lender will probably be the harder search, but there’s no real trick to either, just a lot of legwork.

“I’d just pick up the phone and started making calls,” said Fox, the broker.

Most of all, when you encounter any resistance, press on and don’t give up, especially when it comes to real estate agents.

One of our most frustrating experiences involved an agent at a Westside firm that specialized in VA transactions. He knew the ropes but wasn’t very aggressive. In three weeks, he showed us one property. On our own, we found two dozen that we could have bought.

Dennis Kuewa, veteran services officer at the Los Angeles regional office of the VA, has a simple solution regarding uncooperative agents.

“Take your business to another one,” he said. “There are enough good agents to choose from--probably too many.”