Military Housing, rentals, home buying, real estate, VA home loans - Army Times

Off-base housing — what you need to know

Housing can be one of the most difficult aspects of military service because of frequent moves. The services offer many programs and benefits to ease the situation and ensure that adequate and affordable housing is available.

Military personnel arriving at a new duty station must report to the local installation housing office for housing referral assistance before they rent or buy housing off base.

The housing office often is the best source of information about available community and privatized housing. The office serves as a liaison between the military community and civilian real-estate agents and landlords. Defense Department policy calls for the services to look to the local community first to provide required adequate housing and provide aggressive housing referral services in base housing offices.

In many cases, installations’ Web sites have information about housing in the civilian community. Also, base legal offices often are willing to review real-estate contracts before members sign them.

Defense officials are deploying the Automated Housing Referral Network (AHRN) across the U.S. to provide a central Web site for information about available houses for rent. AHRN is accessible from any computer but only to military members, housing offices and registered property managers and landlords.

Contact: www.ahrn.com.

Fair Housing Act

The Federal Fair Housing Act prohibits discrimination in the rental or purchase of a home on the basis of race, color, sex, religion, national origin, disability or dependent children.

Service members who think they have been discriminated against can file a complaint by contacting their installation housing office or a local office of the Department of Housing and Urban Development.

Homeowners Assistance Program

Service members and federal civilian employees who own and reside in homes near a base that is shutting down or being reduced in size because of Base Realignment and Closure actions are eligible for the Homeowners Assistance Program run by the Army Corps of Engineers.

To be eligible, the service member or civilian must be the owner and occupant of a home at the time a base closure or cutback is announced; this includes those troops or civilians who were transferred or terminated within six months of the announcement. That means service members assigned away from the home are not eligible.

This requirement can be waived for service members and civilian employees on overseas tours.

To qualify for benefits, the house must be a one- or two-family dwelling; mobile homes do not qualify unless they meet strict guidelines.

The program provides four options to reduce losses on a home sale when the real estate market has declined because of a base closing or cutback:

The government can reimburse the homeowner for part of the loss, assist the homeowner if there is not enough money from the proceeds of the sale to pay off the mortgage, buy the home by paying off the mortgage or help if the homeowner has defaulted on the mortgage.

Payments from the Homeowners Assistance Program are taxable. Service members who think they may be eligible should contact their personnel office and get a copy of DD Form 1607, “Application for Homeowner Assistance.”

Contact: www.hq.usace.army.mil/hap.

Lease Protections

The Servicemembers’ Civil Relief Act protects renters in the civilian community. If a service member signs a lease and later gets orders for a permanent change-of-station move or for a deployment of 90 days or more, he can terminate the lease by giving the landlord written notice. Some landlords provide other protections, too.

It’s wise to ask the legal assistance office on base to review a rental contract to ensure it is consistent with local and state practices.

Rental Partnership Program

The Rental Partnership Program, formerly the Set-Aside Program, was established to help military members get adequate rental housing at a reduced rate, but it does not mean rental housing is set aside exclusively for them. Representatives from the installation’s housing office and local landlords enter into agreements to offer service members special rental benefits beyond what other tenants receive. This is voluntary for landlords and tenants.

Typical benefits might include a waiver of security and utility deposits, little to no out-of-pocket costs for rent, no credit checks or application fees, a discount on market rental rates and immediate access to housing.

The agreements guarantee referrals to the landlords but also stipulate that neither the installation housing office nor the military services are obligated to pay delinquent rent, damages or other obligations incurred by military tenants.

The installation’s housing office tailors the rental partnership agreements to meet the specific needs of its members.

All the services operate the rental partnership program at some of their installations, continually improve it and evaluate how it can be expanded.

VA home loans

Service members and veterans who decide to buy a house are eligible for a home loan guaranty offered by the Department of Veterans Affairs.

VA does not make the loans but, rather, guarantees them, which minimizes lenders’ risks and reduces their losses in a foreclosure. The money comes from private lenders who volunteer to participate. Because of the guaranty, lenders are willing to offer larger mortgage loans than service members might otherwise qualify for.

A VA loan can be used to buy a house, townhome or condominium; a mobile home, with some restrictions; or a mobile home lot and a farm (but not farm machinery or livestock).

VA buyers and lenders can negotiate interest rates. Discount points also are negotiable and can be paid by the buyer or seller.

The VA generally does not require a down payment, although the lender might. If so, the down payment on a VA loan is minimal.

Buyers of mobile homes (not on permanent foundations), however, must make a minimum down payment of 5 percent. Generally, VA lenders will lend up to four times the available entitlement without requiring a down payment.

VA does not set a maximum loan amount. However, lenders generally will lend qualified veterans up to four times the basic maximum entitlement of $36,000. This means a typical ceiling for a loan with no down payment is $144,000 ($36,000 times four).

In certain cases for loans above $144,000, the maximum entitlement can be increased to $104,250. That would enable a qualified person to borrow four times that amount, or $417,000, without a down payment.

In Hawaii, Alaska, Guam and the U.S. Virgin Islands, which are designated as high-cost areas, qualified veterans can get a no-down-payment loan of up to $625,500. These maximums are subject to change each year. Changes are typically announced in November and December, effective the following January.

Entitlement

There is no restriction on the number of times VA-backed loans can be obtained, as long as there is enough available entitlement to obtain the loan.

A veteran who buys a home using a VA loan can sell the home, pay off the loan and thus “restore entitlement,” becoming eligible for a new VA loan.

Veterans also can have their entitlement restored without disposing of the property as long as the loan has been paid in full — but they may do this only once.

Eligibility also can be restored if the person buying the home is an eligible veteran who assumes the loan and substitutes his entitlement for that of the veteran who originally bought the home.

Funding fees

Recipients of VA home loans pay a funding fee similar to user fees or origination fees paid by civilian borrowers. Funding fees offset losses when borrowers default on loans.

VA borrowers are not required to pay an up-front funding fee to secure a loan and can include the fee as part of the loan amount.

The funding fee for loans with a down payment of less than 5 percent is 2.15 percent or 2.4 percent for those qualifying based on service in the National Guard or reserve. It is lower for veterans making down payments of 5 percent or more.

The VA also charges a funding fee to second-time users of the loan program. This subsequent-use fee is 3.35 percent of the loan amount unless the veteran makes at least a 5 percent down payment, which reduces the fee.

Veterans who have a service-connected disability for which they receive compensation are exempt from any funding fee. Also, veterans who are still on active duty but who have been rated as eligible to receive compensation for a service-connected disability may be entitled to a waiver of the funding fee if they wish to close on a loan before being released from the military. Under the laws of some states, disabled veterans also may qualify for a waiver of property taxes.

There is an additional option for those who have VA-approved home loans — the Interest Rate Reduction Refinancing Loan (IRRRL). This type of refinancing generally requires no credit underwriting and is used to lower the interest rate and payment. The funding fee is 0.5 percent.

Refinancing

A VA loan can refinance an existing mortgage or be used to improve, repair or alter a dwelling owned and occupied by a veteran. On loans to refinance an existing VA loan to lower the interest rate (IRRRL), closing costs — including up to two discount points — can be included in the loan.

Full details on the VA Home Loan Guaranty program, including loan limits, fees, eligibility rules, downloadable pamphlets and more, is online at www.homeloans.va.gov/factsheet.htm.