Dear Real Estate Adviser, I am a 65-year-old disabled veteran and am interested in buying an $85,000 home. My income is from Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). My veteran son will be living with me and contributing to my mortgage. I have good credit and could put up to $60,000 down if needed. But I have no clue what kind of help I can get or where to start. -- Kandy
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Dear Kandy, With your military background, you should definitely pursue a federally backed Veterans Affairs Home Loan.
This could allow you to buy a home with little to no down payment, no mortgage insurance and lower-than-average closing costs. There are no prepayment penalties either if you are compelled to pay it off early. The only extra expected of you is a modest VA funding fee of about 2%.
Contact a couple of large local real estate agencies and ask to interview agents experienced with clients who have bought with VA loans. The agent you choose should be able to put you in touch with banks that are VA-approved lenders (not all are). Closing costs may vary, so shop around.
Qualifying for a VA loan
Your prospective VA home loan lender will still require good credit and sufficient income, plus you will have to contractually agree to live in the house for a minimum period. If your total income stands in the way of the loan, consider buying the house in both your name and your son's name, assuming his contribution will tip the balance -- and if you are comfortable with him taking over the place once you're gone.
If you want to do this, however, first consult a real estate attorney, estate attorney or similarly qualified professional who can suggest the best way to structure the purchase (joint tenants with full rights of survivorship, tenants in common, etc.) to protect you and your son from future tax or estate-distribution problems.
Retain your savings
You do have that 60 grand buffer if all else fails, but it would make little to no sense to plunk it all down on the house. As noted, you'll probably be expected to pay nothing or little down anyway, depending on various qualifying factors. A down payment of more than 20% is seldom necessary on nearly all scenarios unless your credit is really dicey.
Sure, all that upfront money would cut your monthly mortgage payments and expedite the payoff, but given your health and limited income, such an outlay would be a needless risk. Unexpected medical bills, home repair bills, insurance rate hikes and family emergencies tend to crop up when least expected. I'd hate to see you have to sell with all your savings tied up in the place. That old fiscal wisdom of keeping at least 6 months of emergency funds available in a savings account is especially relevant as we age.
Specially Adapted Housing grant
Pursue this, too: Given your disability, there may be free money (the best kind) available to you for assistance in retrofitting your home for added mobility and safety through a Specially Adapted Housing (SAH) grant. Even if your incapacity seems minor now, look into it.
My sense is you should easily qualify for that $85,000 home through the VA home loan program and will soon become a happy homebuyer.
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