Budget Like a PRO in 2024 with These VA Loan Hacks

What's going on guys it's David Piatek and today we're talking about budgeting for home ownership to include the two main things that go into purchasing a property is are you considering doing a down payment and what closing costs look like so we're going to break that down because it's all relevant to your purchase. Yes the VA home loan is amazing there's a lot of benefits to it like not putting a down payment but again does it make sense to do that and in a way the does encourage you to put a down payment and I'm going to explain that here in a little bit. So a couple things to keep in mind while you're going into that home ownership journey so the one thing that we see people the hold people back from home ownership especially with like a VA home loan or really any type of product is really understanding their budget on a monthly basis what they can afford controlling spending right so you're then able to save money for things like closing costs or considering a down payment and if you're not doing a down payment can you use that money then to fix up a property repurchasing and remember there's also costs associated with home ownership I'm going through that right now buying tools and things that I need for around the house and trust me this stuff adds up and if you don't have that plus maybe a little bit of a then you could be in or put yourself in a you know in not such good position and you want to start this process as early as possible because you do need to give yourself time depending on your financial situation if you have good questions or want to do a one-on-one consultation happy to help and you guys could schedule with me down below so one of the things that I talked about was the down payment and people will ask like why do you why are you asking if I want a down payment on my VA home loan well I've done plenty of videos around the VA funding fee and I'll also link it in the description below but in essence if you don't have a 10% or greater VA disability rating then you're going to be paying the VA funding fee now the VA funding fee varies based on if you're using it for the first time or multiple times but I'm going to go with the latter when you use the VA home loan multiple times with no down payment and no service connected disability your VA funding fee is 3.3% of the purchase price so as you can tell if you're buying a place let's say for half a million that's tacking on a rough about $18,000 to your closing cost which again it puts you in an upside down equity position this is why I always say it's important to file for your disability if you want to do that or if you've been thinking about doing it I encourage you to at least to give it a shot and it's not a fun process but it's something that definitely has its rewards like one of them being for the VA home loan no VA funding fee plus that income does count towards that towards your qualification the other part is that what I mentioned is they encourage you to do a down payment because if you do a 5% or 10% or more down payment that VA funding fee gets reduced drastically so again you put yourself in a better position and also if you're selling a property and you have money that's coming to you then you could use it towards the down payment and closing cost so that is a caveat to all of this now let's kind of walk through closing costs now I'm going to give you a general overview of it because it is somewhat difficult to pinpoint what closing costs are going to be early on in a transaction because most of the fees on let's say a loan estimate which is the first document you get that show breaks down the closing costs and just to kind of FYI that loan estimate turns into a closing disclosure a little bit later once all the final invoices have come in there's other metrics that need to be met like for example rate needs to be locked loan needs to be underwritten appraisal needs to be back typically if you're doing a VA condo approval that doesn't necessarily have to come through in order to issue this document but it's going to give you a more realistic sense of what the closing costs are going to be because they've have all the final invoices and then later when you're at the title company closing they're going to wrap up all the final invoices attorneys if there are any sellers figures all of that stuff is going to get wrapped up together then you know your final amount now but it's safe to say on a purchase transaction it's about three percent of the loan amount it's kind of on average we've seen it lower we've also seen it higher depending on who you work with as well i'm always harping about the home loan being an amazing product but oftentimes actually looking at the data from the VA's uh servicer or how many loans have been originated we can see that veterans get overcharged a significant amount of money on a monthly basis in the tune of over 40 million dollars in extra fees just because remember i've always say if you are calling someone because you're watching an advertisement you are paying for that advertisement in some way so just kind of think about that and look at your costs and if you guys want a comparison also happy to help uh that part um so what makes up a majority of your closing costs right it's going to be lender fees of origination fees and discount points there's going to be fees like title you can't control uh because oh no i'm sorry not title appraisal fees because an appraisal fee is ordered through the VA so that cost is going to be whatever the VA appraiser charges or what the regional loan center has set uh you're like credit report fees flood fees uh condo fees if you have any then you have title fees and every state does a little bit different sometimes you pick your own uh and sometimes you know you will have help from a realtor providing you or helping find one or you use the sell side now always ask if they do a military discount because we've definitely seen that uh plenty of times so it's worth saving a couple hundred dollars uh if you can do that you have government recording fees but you can't control those either right that's going to be like transfer taxes in some states for example like florida you have to pay a separate tax to take ownership of a property both sellers and buyers pay that tax uh but again that's something you want to ask who you're working with if they have information on that and also you can go to the county's website wherever you're buying and look up the information on there as well uh an important note uh with this also is which is your taxes and insurance now at times you are able to exclude those taxes from a VA home loan if you meet the VA disability requirements for the county and i did a whole video on that as well so i will link that down below so you guys can check that out i think it's important to there's a lot of caveats with what you're trying to do right it's not just one part it's accumulation of steps that get you to that final point of hey i'm signing and buying a home if that's something you're interested in this is what the channel does uh we want to get as much information to the veteran community as possible this is why i did how i do what i do because i'm in it and i understand why it's important to pass that information along um so uh with those escrow accounts you're setting up taxes and insurance how much they collect for that really depends on when you're closing in the year what the tax cycle looks like but again uh you can reach out we can kind of go through where you're looking to buy or talk with like a local realtor that knows that area now another part to understanding these closing costs right we have the three percent ish give or take uh you're definitely going to be more in the five to six if you were uh if you're working with certain lending institutions keep that in mind um is you can ask for seller credits to cover that uh in in markets where i don't know it's it's kind of tough because every market's a little bit different so you're going to kind of have to figure out what what that looks like but if a market is very hot meaning properties sell right away uh very short cycles it's harder in general right this is my opinion on getting those offers accepted with seller with uh seller credits uh but there's definitely markets where we see people get two three four percent in seller credits we've even had people pay off cars at closing because yes you can do that uh if you don't know all closing costs can be paid for by a seller plus an additional four percent in seller concessions to pay things off like car loans if you needed to help qualify or they give you the extra money uh it may sound crazy but again we see it happen all the time another thing that you can ask for when it comes to uh helping with closing costs uh one you can get a gift from anybody uh that's kind of unique you do have to sign a note saying that uh that that money is a gift that you don't have to repay it so keep that in mind uh you can't ask for lender credits now it's tricky with lender credits because uh this is more technical but kind of like back-end operations the margins are just not there anymore to say hey we're going to get you know then they may offer a quarter higher interest rate but the money you would get back just isn't really warranted i think uh especially right now we just don't see the margins uh that big difference where you're hey if you're going up a quarter rate in rate you can get an extra you know one percent in line the credit we're just not really seeing that across the market another thing that you can do is look into down payment assistance programs uh we did a whole video on that as well but there's a lot of restrictions with those programs both in qualifying for them uh being able to get that and then the other part is going to be once you have it if you move out what happens then right you might pay that money back and make you some tax on pieces to that now let's talk about some strategies for your down payment or closing costs again you don't have to do a down payment uh watch the video not too long ago dave ramsey saying being alone are bad because there's no down payment you have no equity in a way that's true but that shouldn't hold you back from home ownership and i'll just use a quick example of that if you held off back in like 20 you know 21 when rates were really low and you missed that boat with that mentality you are where you are today with a higher rate environment prices have continued to go up i think it's now like 18 months straight or so um so to all those things are things to consider when you're going through this process um but there's different avenues to get creative with a one thing when it comes to you know your closing costs let's say sometimes employers offer assistance programs that we've seen that that's pretty nice uh we've seen local churches offer some programs uh as well and then you may have resources as well you may not be aware of that you can use like a 401k or tsp account i'm not a financial advisor by at all um but i have a tsp account myself and i have a 401k as well right so from my end sometimes you know we'll have people tap into some of that equity and uh type in some of the money in the 401k in the form of a loan again this is my opinion that way you're just not liquidating it you don't pay tax on it you're just kind of borrowing against it yourself and that money can be used for uh your closing cost now that statement in itself warrants another piece to this is that you can't go out and borrow money for your closing cost in the sense that i mentioned like oh you can take a loan on against your 401k because that's your money that is in an account you're taking a loan out against your money that's fine if you have if you went out and got a personal loan well the lender's going to look at your last two months of bank statements and if they see that they're going to want to source it now if when that sourcing process it turns out to be a loan well guess what then now you won't be able to use that money and you can derail the transaction so make sure that you talk with someone again happy to help walk you through that piece one strategy also is to set up a separate savings account i would say put it in a separate bank like not even the not the bank that you're with a separate one so it's harder to access that money in the sense that you just can't access it as much overall if you don't have a monthly budget highly recommend one um i did a video on it that's a long ago about setting up that budget um you want to reduce as much of your cost as possible from going out subscriptions you have any luxury purchases that you that you are making because again that helps you set money aside or pay down bills to get to where you want to be and you still you know you may want to look into getting a side like side hustle right getting a side job to get some additional money but again that situation is going to be um based on each individual person and you also want to be able to start tracking that or everyone again financial picture is different i would say you start a year or two out seriously looking at what your plan is for home ownership it happens sometimes where people may not be looking at home ownership but they get into it but there's really never early enough time to get a pre uh to at least talk to about it maybe a pre-approval or pre-qualification just so you know where you stand your income and credit what it gets you today is that gives you that clear path down the line to execute on it and revisit your um your budget on a monthly basis make sure you're tracking your spending you're paying your bills on time uh all of that fun stuff so when it comes down to hey i'm actually serious i want to be able to purchase a property you have those tools lined up i hope you guys learned some stuff please share our videos with the veteran community um if you like it of course uh make sure you guys smash that like and subscribe button and i'll catch you guys soon