September 19, 2021

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Mortgage News

Why military families struggle to compete in housing market

WISCONSIN (CBS 58) – The property market was booming during the pandemic, but it became more difficult for veterans to buy.

Andrew Buczkowski retired from military service in August 2020 after twelve years of service. Only a few months later he married his wife Stephanie.

In November, the couple learned that they were expecting a little girl.

“When we found out Stephanie was pregnant, I thought we couldn’t live in an apartment anymore,” said Andrew.

The couple already have a 7-year-old son.

“It was important for us to settle in that he would stay in one place, put down roots, so that he could make friends,” said Stephanie.

Roots none of them ever had.

“We grew up renting,” said Andrew.

Andrew and Stephanie received pre-approval for a VA home loan. It’s a program that allows vets to shop with no down payment, no private mortgage insurance, and lower interest rates.

“In all honesty, it’s probably the biggest advantage the VA gives you,” said Andrew.

Chris Birk is Vice President of Mortgage Insight for Veterans United, the largest VA purchase lender. He says last year was the biggest year for VA loans as more people want to buy.

In Milwaukee, VA purchase loans increased 13 percent in the first half of fiscal 2021 compared to the first half of fiscal 2020.

“At the core of that benefit was the idea that they were giving up the ability to build credit and savings to defend our freedoms,” Birk said.

But the market is competitive and veterans lose out in this competition.

“If you compete against conventional or cash, the veteran will lose every time,” said Beth Jaworksi, broker at Shorewest Realtors.

Jaworski hasn’t worked with the Buczkowskis, but works with veterans. She says that misunderstandings about the loans put off sellers.

“One of them is that it will take longer because it’s a government-sponsored program, which is not really true,” Jaworski said.

Birk says these loans lasted longer 20 years ago, but no longer. He adds that VA loans closed just four days later than traditional loans in April

“The VA has invested so much in automation and technology to help VA Loans become more competitive in today’s marketplace and that’s why you see so many veterans taking advantage of that,” Birk said.

Another thing that makes sellers suspicious is the evaluation process. VA appraisers can assign work orders for things like peeling paint on the outside and handrails. Everything needs to be fixed and re-inspected before closing. Many salespeople do not want to deal with this.

“It’s hard to hear,” said Birk. “We know it’s happening in markets across the country.”

After several failed offers, the Buczkowskis went to an open house and realized what they were dealing with.

“Our agent asked, ‘Hey, are you working on the VA home loan?'” Stephanie said. “And the salesman’s agent was like, ‘Eh, we could do it.’ And the way he said it, you could tell that it wasn’t the most popular loan on the market. “

They didn’t get the house either.

“I’m having a baby, which I think would be the most stressful, but that was the most stressful of my life,” said Andrew.

Jaworski says she has customers who are veterans just waiting for the market to calm down. She has another customer who has decided not to use his VA service and just pay more.

“The loan officer was beside himself if we couldn’t help that because it was costing him over $ 100 a month,” Jaworski said.

When the baby came in August, the Buczkowskis wanted to give up and look for another apartment. Then they went to another house.

“I was standing right there and Stephanie came in and she said, ‘Wow,'” Andrew said.

They decided to try another offer. Your agent asked the seller’s agent if it was okay to write a letter. The agent said yes.

Stephanie sat down and began the letter by explaining her situation.

“Dear homeowner, my name is Stephanie. My husband has just left the army after 12 years and is ready to raise our family in a home where he doesn’t have to worry about moving and uprooting, ”wrote Stephanie.

It worked. Your offer was accepted because the sellers are also a veteran family.

“What we were looking for in a home and a seller is what they were looking for in a buyer, so it worked, but unfortunately, not everyone will be that lucky,” said Stephanie.

Jaworski says it shouldn’t be that hard.

“I think brokers really need to band together to work with the federal government to do a little overhaul of this program,” Jaworski said.

She says that this could include motivating the seller.

“You can pay some shutdown costs, pay the tax of the year, pay the title policy, do something that way,” Jaworski said. “Or do something with the peeling paint.”

Birk says civilians and real estate agents also need more education about how the program works.

“Not letting veterans compete with their advantage seems like a disservice, given all the things they’ve done for us,” said Birk.

Meanwhile, Andrew and Stephanie have just moved into their new home and are preparing the nursery. They look forward to offering their children something they never had: a place to call their own.

“It’s a bit like that American dream,” said Andrew.