Considering buying a home while stationed on Oahu? Here’s everything you need to know about using the VA loan in Hawaii!
So, I’ll be totally honest — for so long, the idea of buying a house scared me and confused me to the point of me not even looking into it or considering it. It seemed so daunting with all those big numbers and terms I was not familiar with. If anyone else is nodding their head, stick around!I always knew Dane was eligible to use the VA Loan for veterans, but I never really thought too much about it, because buying a house always seemed so far out of reach, especially with the cost of living in Hawaii.
When we decided we would be staying in Hawaii after Dane left active duty, we knew it was time to get down to business and understand the process of using the VA home loan. I am one of those people that has to understand something inside and out before I sink my teeth in, so I came to our lender and real estate agent with a boat load of questions and I also scoured the internet for answers – basically any website I could find with information on using the VA Home Loan, FAQ about the VA Home Loan, what to know about the VA Home Loan before you pull the trigger, benefits of using the VA home loan for veterans and everything in between!
I figured if there was anyone else out there who felt even remotely like I did, I would put together a post of all the questions I had and the answers I got. Keep in mind that
these are the terms for using the VA Loan in Hawaii, which we have found is a bit different than other areas of the country. So let’s get to it!
How To Buy A House In Hawaii
VA HOME LOAN IN HAWAII FAQ
1. What is the VA Loan?
The VA Loan is a loan opportunity for veterans to buy a home. (I know, it seems straightforward, but heck — someone might not even know this resource is available!)
2. How much can I get a VA Home Loan for?
It ranges depending on where you live, but for Honolulu County, you can get a VA Loan for up to $721,000.
3. Do I have to put cash down?
No. The beauty of the VA Loan as opposed to a traditional loan (i.e. one you could get from a normal lender and not the VA that usually requires 10-20% cash down) is that it does not require you to put cash down. That said, you certainly can if you want/are able.
4. How much does it cost to use the VA Loan?
It costs nothing to use the VA Loan. If you meet the eligibility requirements, you and your spouse are able to use the loan benefit.
5. What about closing costs?
This part is a little bit murky. The VA Loan states explicitly that they want to make home buying affordable for EVERYONE, not just a small percentage of veterans, so they limit the amount of charges at closing.That said, the amount is limited – not non-existent. You will still need to pay something…more on that in a minute.
6. So I found a house for $400,000 but my lender is telling me that my loan amount is $415,000. What is going on?
Don’t freak out! The VA has what iscalled the VA Funding Fee (some veterans with a certain disabilityrating are exempt from this fee), which essentially enables the VA tocontinue allowing this benefit. Instead of a monthly PMI (mortgage insurance that goes along with using a traditional loan),the VA has what is referred to as the funding fee. The first time you use your VA Loan, this fee is 2.15% of the total loan cost.
*Now, it’s important to remember that you can roll this fee into your loan OR pay it outright at settlement. Most people finance the fee into their loan (100% acceptable), but more power to you if you have that money in your back pocket and ready to spend.
7. Okay, so I found a house and am ready to go to settlement. Why is my lender telling me I will need to bring money with me? I thought there were limited or no closing costs?
There are loopholes to every rule, right? Right. With that in mind, there are things you will have to pay for at closing a.k.a. when you can get the keys to your new place. For costs associated with the loan, you will usually have to pay an origination fee, appraisal fee, home inspection fee and title charge.
Sometimes you’ll even need to pay for the credit report the lender had to run to get your credit score and other information. For non-loan related costs, you will need to pay recording fees (the people who write down and verify you are the new owner on a state level), prepayment of your property taxes and homeowners insurance, prorated interest (unless you settle on the 31st of any given month), and any HOA fees associated with the property.*It’s important to note here that in Hawaii, you do not get your keys at your closing. Your money has to sit in escrow for 48 hours before you are able to get the keys!
8. How long does this process take?
Gosh this is such a a good question. I hate to put any specific time allotment on any part of this process, because I can only speak for our particular situation. For us, it took a total of 45 days once our offer was accepted by the seller.
After our offer was accepted the first step was filling out paperwork for both our escrow agent and our lender. From there, we faxed in all the information they requested (it’s a lot, so be prepared) and set up our housing inspection. After the inspection, we set up our VA Appraisal. *THIS PART TOOK THE LONGEST* (Apparently VA Appraisers are notoriously particular about things).
The next steps all sort of happened at once but it was more signatures, more paperwork, some check writing and finally..the keys to our new place! I was grateful for the 45 days, as to not rush a single part of the process and for us to fully understand what every signature was for (and believe me there’s a sh*t load).
Whew! I know that was kind of a lot of information and if you’re not in the home buying process you’re probably like – WTF?! I know – I get it. I was there once, too.Have you ever used the VA Loan? I would love to hear about your experience!
