Five Questions With – Home Financing for Veterans

July 16, 2019

- By Rear Admiral Thomas Lynch (U.S.N., Ret.,)

This issue’s “Five Questions With” features Rear Admiral Thomas Lynch (U.S.N., Ret.,) the executive chairman of NewDay USA, a nationwide mortgage company for Veterans.

What challenges do veterans face with buying homes?

A. Often, when ending their service in a foreign country, veterans find themselves beginning their home buying process worlds away from where they intend to plant roots. As a result, many veterans do not have the luxury of being able to casually browse listings in their city or being able to drop in to open houses. In addition, military veterans are more likely than other consumers to report problems managing credit as it can be difficult to properly review such issues when facing deployment. Ironically, veterans tend to have excellent saving habits, but their outsized difficulties in managing credit can hurt them when it comes time to purchase a home. What’s more, frequent moves can make it more difficult for spouses to maintain steady employment, putting their household under further financial strain.

How are clients who are veterans different than clients who didn’t serve?

A. The military emphasizes loyalty, duty, respect, selfless service, honor, integrity, and personal courage. Those aren’t just words, but values that are drilled into every service member, and values that service members live throughout their time in service. As a result, veterans tend to be highly motivated and highly reliable individuals. Studies have shown that they have higher employment rates than the general population and, are more likely to have better saving habits. Veterans also tend to have extremely low delinquency rates, indicating that they are among the most reliable demographics with respect to timely payments. Veterans also have a higher rate of intergenerational living arrangements — you see many more veterans looking for homes for their family, rather than civilian single or coupled homebuyers.

Do you need to market your real estate services to veterans differently?

A. One of the greatest challenges that veterans face in transitioning to civilian life is unpreparedness for what life outside of the military entails. The more you can do to help ease that transition for veterans, the better it is for everyone involved. Our marketing reflects the values that many veterans hold: Clarity, purpose, respect, service. These are values that veterans care about deeply, and they need to be reflected in everything that a REALTOR® who wants to market to veterans does. As a veteran-centric company, we also want to ensure that service members understand and fully use the VA (Veteran’s Administration) benefits that they have earned through their service to their country. We aim to educate our customers about VA home loan benefits and recommend that veterans work with REALTORS® who are familiar with VA home loans so that they can fully maximize these well-deserved benefits.

Are VA (Veteran’s Administration) loans always the best option for veterans?

A. VA loans are extremely attractive. In most cases, eligible homebuyers are not required to have a down payment, there are no monthly mortgage insurance premiums or private mortgage insurance (PMI) costs to pay, there are limitations on closing costs, lower average interest rates, no-prepayment penalties, and various other benefits. In the vast majority of cases, a VA loan will be the best option for veterans, and I do not see the rates for VA loans for veterans going up anytime soon.

What are the differences working with a client who is active military vs. a client who is a veteran?

A. The biggest difference is that an active duty service member may still have responsibilities that take him or her away from the residence. This is one of the greatest challenges for service members — it can be very difficult to manage finances and contractual obligations remotely. It requires flexibility in communication or working more with spouses. Mortgage lenders need to recognize that military service members lead different lifestyles compared to civilians, and so it is imperative that lenders offer financial products and services to meet their specific needs. Currently, America’s service members, and its veterans in particular, are tremendously underserved. Lenders need to ensure that they are supporting veterans by providing them with responsible financial products and services as they transition to civilian life and homeownership.

Admiral Lynch retired from the U.S. Navy after a decorated 32-year career. After retiring from the Navy, Lynch served in many private-sector leadership roles. He’s a graduate of the U.S. Naval Academy and is also the Co-Chairman of the NewDay USA Foundation. Home Financing for Veterans