For veterans, no-nonsense march to homeownership

At a time when American servicemen and women are risking their lives in Iraq and Afghanistan, they deserve all the help they can get.

And after battling overseas, the last thing they need is to return home and have to wage another fight against the red tape of the VA.

To that end, author David Reed has set out to ensure that at least VA loans are easier to access, and in many ways his no-nonsense book looks certain to become a useful resource.

Reed first charts the qualifying criteria -- in times of war and peace, dating back to 1940 -- applying to almost 25 million veterans, the spouses of deceased veterans, select reservists and National Guard members, not forgetting today’s active duty personnel.

Skimming through those criteria, plus the paperwork needed to locate military records and obtain proof of eligibility, gives a sense of the scale of that dreaded departmental red tape. But Reed says the process is becoming more streamlined and user-friendly.

Those same changes also have made life easier for others in the real estate industry.

“Lenders can approve VA loans in minutes, order appraisals directly and work with VA loans under a highly automated process,” Reed says.

The VA itself does not provide funding, but it does the next best thing: guaranteeing up to a quarter of a conventional loan limit. That now stands at $417,000, which means the VA will guarantee up to $104,250, a huge advantage for borrowers as they go mortgage shopping. The guarantee provides a safety net for lenders. It means that if the loan is approved in accordance with VA guidelines and then goes bad, the lender will be reimbursed the amount of the VA guarantee.

Qualifying veterans still must meet certain credit rating and income levels. Reed says VA loans are “a bit more lenient” on credit standards, while the income equation requires that monthly mortgage payments, plus homeowners insurance and property tax, be no more than 41% of gross income.

VA loans can mean lower interest rates, no down payments, fewer closing costs and no need for mortgage insurance. Other benefits can extend to such things as grants, of up to $50,000, to retrofit homes for disabled veterans.

There’s another big advantage, Reed says, when it comes to refinancing. No matter how circumstances may change, veterans do not need to requalify; they automatically get a new loan so long as it lowers their monthly payment.

Despite these many benefits, Reed takes care to address situations in which VA loans don’t apply, such as for investment properties or second homes, or are not necessarily the best financial option.

The author of two other books on mortgages and a mortgage banker by profession, Reed picks his way meticulously through the property-buying maze. He dissects a mortgage application form, discusses key issues including credit scores, finding a lender and realty agent, and examines broader topics such as bankruptcy and foreclosure.

His attention to detail, spread across a wide range of lending-related issues, adds value to the book and extends its appeal and application to a wider audience than just those with military connections.

Reed also keeps a calculator close by and isn’t afraid to use it. The results can be helpful -- such as a breakdown of income and expenditures showing how much a veteran can afford to borrow -- although, at times, the text is so dense with charts and figures that it’s hard to follow.

Similarly, Reed’s description of the mechanics underlying changing bond, interest and loan rates is more than the average home buyer needs to know, and almost eight pages calculating mortgage payments, from 2.5% to 18%, seems excessive.

However, this book does include a handy reference of the VA’s regional loan centers and state headquarters. Reed says some states offer variations and additions to the basic VA package, and he directs readers to www.cdva.ca.gov to learn more about California’s CalVet loans.

Of note: California has more veterans than any other state. Department of Veterans Affairs figures at the end of September showed 2.1 million veterans in the state, well ahead of Florida’s 1.7 million and the 1.6 million in Texas.