 Thanks for joining us today. On the life of the land is in its real estate. I'm Keena Nisley. I'm its real estate agent at Keller Williams Honolulu. I am here today with Larry Gonzalez from Aligned Mortgage. He is a senior loan officer and he is here to share with us about a VA loan, what it is and how you use it. So thanks for joining us Larry. Thanks for having me Keena. So great so tell us a little bit about yourself first. Sure so I actually not only know about any of the loans on the VA loan, I'm actually a veteran so I served in the Navy for 24 years and I've been here for actually 11 years and I've been a loan officer now for four and a half years. I'm on my fourth really full years a loan officer and I absolutely love doing what I do. I'm retired so I have a lot of time and between doing loans I'm a scout master. Actually today is the one-year anniversary I took my troop to Big Island last year and we climbed Honolulu. 40 to 50 pounds on our back and we climbed to the summit and it was it was awesome those life-changing experiences that these children these young men get to do but that's kind of yeah it's me and so that's what I do. It's kind of a little bit about me. If I'm not doing loans I'm scouting, chirping. So we always hear about a thing especially in real estate about a VA benefit and I run into young soldiers that I love I love when I hear I don't think I get that. Yes everybody gets that so Larry can you explain a little bit about what a VA benefit is? Sure you know I'm that soldier you talked to you I did I when I was active duty I had no idea I even had this family. It wasn't until I went to buy my second house here that somebody said oh you can actually use your VA benefit and so really what is missing for us in the military more active is education. If you go to the next slide there you go so the next slide. So if you are active duty or you served in the regular military any of the five services for 90 days in a time of war and basically if you're in a service now you're eligible to use your VA home on benefit and one of the other things we'll get into later is the if you're in the guard you're actually eligible to use your VA home or guard reserve after six years and we'll get into that a little bit but the big thing is people don't know they have this benefit so the and the other thing is they don't really think about that entitlement they have VAH so you got VAH you got the VA home on benefit and then you got this amazing place we call home Hawaii and the three of those I like to call I call it the triad of awesomeness because if you combine those things with education boy I tell you if you have a powerful tool that you can use to build your legacy and your you know secure financial future so as I was saying if you're you know anyone who's in a service now is eligible as long as you know basically they get out of boot camp and they start their service within a couple months they've been in 90 days they can pretty much buy a home I've had a 19 year old service member Mary come out here bought a home she can't even have a beer but she can own a home is that crazy but it's true you know what I chalk that up to education somebody told her that she had this incredible benefit and then going back to those who are in the guard or the reserves there's so many on our island because we have we only have the national guard we have reserves they have no idea that they have this benefit they don't you know if they've retired a lot you know they don't get their pension that doesn't start until they turn 60 but that benefit after six years on reserves you're eligible or that a national guard and if you've been activated on title 10 orders you also have that benefit and so for 90 days so you don't have to wait six years you go on title 10 orders you're good so a reservist is long even if they haven't ever been active duty as long as they've been in the reserves for the national guard for six years they can use a VA low yes yes they're eligible yeah there's so many you think about all the all the all the all the people who work like say at the shipyard you know there's a lot who are in the guards the national they don't necessarily know they have that benefit they were doing a pretty good job at educating but still there's a lot of folks who just don't know about that and then so you know one of the things that I hear and I you don't hear as much here but when I do loans on the mainland I hear from them oh the deal was so so tough to use it's so difficult that's not true and and when you explain it to them like oh wow that is pretty good but the VA loan has some significant advances the first one is there's no down payment requirement none now I know when I was growing up and maybe you too Kena I thought you had to have money to buy a home yeah my I come from a my mom raised me and my sister much by by herself for a lot of my youth and we just rented and we grant and move to the next place in the next place so we just we never had a lot of money but so I never really thought I could buy a home and in my in I think for 15 of my years in service in 15 years I'd never bought I bought in the first home I bought I use the conventional home all right and I and I had to do a down payment which is crazy but the VA there's no down payment requirement another advantage is there's no private mortgage insurance and private mortgage insurance on a conventional loan or an FHA loan if you don't put 20% down you have to pay private mortgage insurance or mortgage insurance premium and basically that's just insurance to the bank that you're not going to default on the loan it's just an added payment with the VA loan you don't have that now there is a funding fee but you know the funding fees paid up front and it's actually rolled into the line it's kind of like a mortgage or you know mortgage insurance but it's a one-time payment it's done and the cool thing is if you have 10% of more disability which most people on active duty don't but if you have 10% of more disability you don't pay you don't pay that funny fee and as of January 1st if you're active duty and you're a purple heart recipient you don't have to pay a funding fee which is another great advantage and actually I've had one purple heart recipient buy a home this year and and we just asked the question do you have a purple heart we saved them $13,000 for that question you know because you have to pay the funding fee so so that's another advantage and then we kind of get to the you know the the stereotype oh it takes too long to do a VA loan or the rates are too they're they're too high actually VA rates are the lowest really the lowest out there they're about an eighth to a quarter point lower than conventional rates are and we close and if you look the rates are that lender dependent and the time to close the loan is lender dependent there are some lenders right now they're so bogged down they're not doing 45 day or even 60 day loans actually for us here at Align our purchases have always taken our priority and we're still closing loans in 30 days sometimes less if you know if it's necessary so those are some big myths about you know that's a big myth about the VA loan but really that's a huge advantage close quickly they're pretty simple loans to do and the rates are really good some of the myths that I hear so and a lot of folks who move to Hawaii on orders they already have a home on the mainland and they'll say oh I can only you think they're immediately thinking I'm going to base housing I'm ready because I already used my benefit well out here like no matter where you can use your VA home on benefit more than once you can even have two VA loans at the same time and because of Max County loan limit here so high say you're on the mainland maybe Texas you spent two hundred thousand two or fifty two hundred thousand dollars on a home just keep simple math I'm just a loan officer so two hundred thousand dollars on your on your home on the mainland well here you still have five hundred and sixty five thousand and chains left that you can use to buy a home with no down payment anything above that there's a small down payment requirement that's not that much but a lot of people have no idea that they can buy when they get out so for example what what would be the small down payment if they went over the the ceiling oh let's go back to that example so say you have five hundred sixty five thousand left in no money down eligibility and you found a place for six hundred and sixty five thousand so a hundred thousand dollars above that your down payment requirements going to be twenty five percent of the different twenty five percent of a hundred thousand or twenty five thousand dollars so that's that's it is which is still lower than if you were to make a you do a conventional loan with a five percent down payment so the benefit of use there's still a benefit in using the VA benefit the VA home on benefit out here so in January that there is no cap to the VA loan so yeah yeah so if you have no entitlement in use and this has been such a game changer especially in Hawaii if you don't have any entitlement in use and or you've never used your VA home on before you there is no cap that meant that county loan limit is gone away that you can go up to and in some cases beyond two million dollars with no down payment you have to income and credit qualify and there is a credit score requirement and every lend is a little different on their credit score requirement but the credit score requirements are still pretty low but yeah you go I've had I've had multiple million dollar purchases with no money down I've had we've not me personally good in our in our brains we've had a three million dollar VA loan purchase with no money down big mortgage but no down payment so with all the guidelines changing with with the COVID-19 did you see a big change in your guidelines for the VA loans that you're doing so because of all the fears at the banks and our and our investors have with regards to forbearance which ultimately you know leading to foreclosure if people stay unemployed the credit score requirements pretty much across the board in our industry have gone up now some of the bigger banks like Chase I think is at 700 maybe even 720 we're we were at 580 now we're at 600 we were a little higher but we dropped back down to 600 just because really we have out here especially considering such a large military population we're pretty stable and we do good loans we do solid loans so um so yeah so our our limit is a little lower to 600 okay so I do run into a lot of clients they're worried about is this permitted they walk into a house sometimes Hawaii homes are a little you know it's a little attachments going on and it's always is this permitted so how is it VA handling those those things that might not be permitted it used to be a big deal because if there is anything that was not permitted you couldn't use your VA loan on that home but as of a couple years ago that that changed so say you have a five bedroom three bath home but one of the bedrooms was impermitted as long as the home was done and you know that bedroom was added in a workman like manner that's fine you will not get any credit if you will for that that fifth bedroom it will be assessed or appraised as a four bedroom three bath not a five bedroom three but three bath but you can still you can now actually do a VA loan on a home that has uncommitted parts of the property and another question I always run into you as a real estate agent because as you know I work with a lot of investors they all want to use that VA rehab loan so can you kind of fill us in I wear that hat right now well VA's not doing VA rehab loans right now just because of all that's going on in our nation but even then is I don't know I have not done a VA rehab loan here I've heard other people may have but I haven't really seen it and I think a lot big reason is it's not for cosmetic repairs it's for more you know bigger repairs and repairs that require permitting and the permitting process here as you know so I haven't seen one it's definitely not the VA is not doing them right now anyway so okay all right so now the biggest question and I know there's a slide in your stack about whether you should buy I get a lot of young soldiers that come in offensive should we buy I know I think maybe we should just rent so what what would you say about the renting versus the buying and you know if you could go to slide nine you know buying versus renting you know what I tell folks is you know what does BAH stand for and especially if they're with a bunch of active duty people they're like oh since we're basically allows for house and I'm like no sense to buy a house it's exactly what it stands for it because you are you're either buying your house or you're buying your landlord's house and I don't know if you keep that up that that that slide up yeah so when you rent and then this is for I think I'm not sure let's say it was an E see what was it an E I want to say it was an E5 with dependence scenario an E5 could you're using their with their equivalent BAH they could buy a $500,000 condo or town home with a $500 maintenance fee this is what this scenario is and basically your your BAH covers that now if you're renting or you're in base house and you lose that and I'm that guy I when I got here I went right to base house over six years I gave up my BAH so it was over $4,000 a month I gave up over $300,000 in BAH and so we don't even and I didn't even think about I didn't think about it so you know if you look at this if you were to buy the equivalent and when you leave base housing or rent what do you get when you leave you get nothing you know if you're renting you may not even get your security deposit back actually it's cheaper to buy a home that is to rent right because if you rent you got to pay a security deposit and first month's rent before you even step on the house if you buy a home you're you have to pay for a home inspection and maybe that's about it you can work you know if you do work with us we're gonna cover your appraisal you listen to one of our seminars but you can move in with just that and your first mortgage payment isn't until two months almost two months after you move in so I mean when I tell people that by are you kidding me you know you're renting a $3,000 home that's $6,000 out of your pocket before you even step in whereas if you're buying a home you're not making that first $3,000 payment until two months after you you close you've got at least two months worth of BAH that you've collected but the bigger thing the bigger reason to buy is you get nothing when you leave after renting but if you buy the potential especially in Hawaii because Hawaii is you know Kenya is all about appreciation and after getting in this scenario that I have up here even using a very conservative 4% annual appreciation over a four-year period you should have about $84,000 in appreciation not to mention you're gonna amortize that loan you know what is buying a home it's a four savings plan right because every month you're putting money into that house that's your house all right it's you know some of it's going it's just pay the bank but you know about a third of it is going to the house that's your savings all right and you're killing you're bringing it loan down so you're making money the law especially belong to you on the home and if you look at the right side of that graph if you left your if you transfer you say you're here on four-year orders your net gain when you take an account that commission you have to pay when you sell it's gonna be about $92,000 that's pretty good what do you get if you're any when you leave zero you say now say you want to hold on to the home a little longer all right you rent it out and say you ran out for three years and you have to pay $500 out of pocket just looking at that graph all right the $92,000 all right $500 out of pocket a month that's what $18,000 over three years so that $18,000 investment over three years just take that four go five six seven $18,000 investment will get you $212,000 in that game that's almost that's over a hundred thousand and $18,000 investment out of your pocket to cover the difference gets you $100,000 talk about an investment that's good and you know as well as I do every you know 11 to 15 years the meaning sales price of homes here doubles in value on you know historically speaking no guarantee on the future but I don't know the way house prices are going right now and we can see that happen. So one last quick question and I have a question a lot can you use your VA loan you talked about renting can you use your VA loan to buy a house that also might have a little rental potential a little ADU a little extra studio to rent out on the side while you live in the house that you're buying with your VA loan. Absolutely so the the the requirement for the VA is that you that home that you buy with your VA loan must be your primary residence you can live in one room and rent the rest of it out I have I've had clients who have bought the home you know a multi you know a multi family or you know with an ADU they live in the smaller in the ADU and they rent out the the beggar part of the home and collect more rent and basically I have some paying almost their entire mortgage the key is it has to be your primary residence doesn't mean you can't rent out of I've had guys who've rent it out a bedroom like I've seen it on Facebook this guy's rented out a bedroom before he's even in the house you know so yeah you absolutely can make sure it's your primary residence. Wow so anything else you'd like to add like what if people want to learn a little bit more about using their VA loan? You know if you want to learn about your VA benefit because I haven't covered I think it's really we just gone very little you know kind of covered the top covered we actually have a VA seminar this weekend it's a virtual one and it's from 10 to noon of Hawaii standard time and if you go to that if you watch that and you buy a home with us we actually cover the cost of your appraisal and and if you want to sign up for that just go to my website it's www.larry.lo.com and then just you know there's a sign that's or there's a button that says you know register for seminar and you do that and we'll sign you up and you know you can watch your we usually do these in person but what's your name? Correct it's a free seminar and there's no commitment doesn't mean we may have to buy a house correct if they come to the seminar. No you know it's education you know and again you may not you may be leaving here soon and that's fine but you should know about this benefit because you know the first time the military taught me about it was when I was at my TAP class my retirement class that was 20 that was 24 years too late you could build a lot of wealth in those 24 years oh my gosh so Larry is great I can attest that I just worked as the on the sell side 37 days that VA loan was closed during our stay at home order so everything was done virtually and we went from acceptance to closing in 37 days which is great and so if you would like more information about using your VA loan please contact Larry if you'd like to shop for homes that qualify for a VA loan I would be happy to work with you or answer any questions and so thank you so much Larry I I learned a ton so I love this thanks you know yeah anything else you want to add really quick I think we have maybe a minute left you know I think people are concerned about the housing market right now and whether they should buy and you know it is a it is a seller's market because the inventory is so low right I don't know if it's ever been this low I have more people who are looking to buy home than I've ever had so it is a seller's market but it's also a buyer's market because the interest rates have never been this low so we're on an elevator you know the way I look at the home prices we're on an elevator and that elevator is going off and it's going off I don't think it's coming back down you know people are saying oh I asked to go hey you think a million dollars is crazy you know high for a median sales price for a home like oh yeah that's no way I grew up in San Jose California median sales price over there hit a million dollars three summers ago if they can do that in San Jose they can do it here I've lived in San Jose I lived here I'll take I'll take Hawaii over San Jose you know six days a week and twice on Sunday so yeah we can go that high all right well thank you so much I hope everyone else learned as much as I did and I will see you all in a couple weeks I have Troy Wada in two weeks sharing about your Delaware statutory trust for those of you that might own some rentals and investment properties that are ready to get rid of those and really don't want to trade into another property so I will see you all in a couple weeks and this has been the life of the land is in its real estate and with think tech Hawaii I will see y'all in a couple weeks all right