Does a VA loan make sense in San Diego?

San Diego may have one of the largest concentrations of military personnel in the country, but they don’t settle there as much as in some areas.

The top spots for VA loan purchase loans in the first half of 2021 were Washington, DC, Virginia Beach and San Antonio, said a study of the Veterans United loan service. The San Diego metro area was ranked 11th for VA loans.

VA loans are mortgages guaranteed by the United States Department of Veterans Affairs and generally do not require a down payment. It can be used by veterans and serving military personnel. The VA claims that about 90% of its loans are made without a down payment.

After sales slowed significantly in the first half of 2020 due to the pandemic, almost all metropolitan areas saw a substantial increase in loans to begin 2021. There were 3,237 VA loans used in the San Diego subway during of the first six months, an increase of 8.2% over the previous year. The areas that grew the most were New York-Northern New Jersey (up 39.14%), Anchorage (33.2%) and Savannah (28.92%).

Chris Birk, vice president of Veterans United Home Loans, said one of the reasons there may be fewer loans in San Diego is that the high number of active duty members means the population is more transient. For example, Washington, DC, still has the most VA loans because more serving military and veterans are there all the time. Another factor is the growth in house prices in San Diego which may make buying more difficult for some veterans.

The median price of a home in San Diego County hit a record high of $ 725,000 in May, a gain of 23% in one year. For an active duty member who is currently on duty, buying a home at the median price of the home with no down payment, using a 30 year loan term, could cost over $ 4,000 per month.

Servicemen on active duty in San Diego earn a monthly housing allowance it could make the payment more acceptable. The lowest ranked member in San Diego receives $ 2,691 per month with dependents and $ 2,019 without. The highest ranked officer receives $ 3,828 per month with dependents and $ 3,330 without. Another thing that helps keep costs down is that VA loans do not require private mortgage insurance like many other low down payment mortgages do.

Samantha O’Brien, a real estate agent for PorchLight in University Heights, said last year made it harder for some servicemen as house prices soared. She said she had worked with military personnel who were looking for a location in San Diego, but decided it would make more sense to go somewhere else where they could get more bang for their buck.

“Those who don’t end up buying, I hear, ‘I can go back to Texas and buy a bigger place,'” she said, “or” anywhere else in the United States. “

O’Brien said a lot of people who decide to relocate to another state, despite being stationed here for the time being, are looking for space for families and generally like having a little bit of land. She said many military personnel will decide to hire and wait to buy something in the area after their service ends.

However, not everyone is rushing out of America’s most beautiful city. O’Brien said she took out four VA loans over the past month that were a mix of young military people buying condos and senior members who bought properties with the intention of retiring here.

Tony Rector, a Coast Guard veteran, purchased an $ 850,000 single-family home in the Del Cerro neighborhood in July with a VA loan. As he is no longer in active service, he does not receive a monthly housing allowance. However, he said he planned to have three roommates and that his job as a financier for a car dealership would help him make the payments.

“It’s just a much better option all around,” he said of a VA loan. “That’s why it’s a privilege for us.

Unlike many servicemen who come from outside the region, Rector grew up in Lakeside and knew he didn’t want to leave – even though he could use that VA loan for an out-of-state location.

” It’s my city. I love it, ”he said.

Another factor that is likely to reduce the number of VA purchase loans in San Diego County is the growth of cash offers as competition for homes continues to be high. Jan Ryan, a Ramona-based RE / MAX agent, said sellers rejected both VA loans and FHA loans (for first-time buyers) for cash buyers in many of his bid attempts .

While the seller will receive the same amount of money, many local agents claim that sellers will opt for cash offers to ensure the purchase closes escrow. This makes sense to sellers as the VA loan will require appraisal, not necessary with a cash offer, so if the appraisal is lower than the asking price, the loan may not be approved.

Ryan said cash buyers, in his experience, might not always be the safest option. They are more likely than a military family to ask for concessions at the last minute or just walk away.

VA loans are also used for refinancing, but likely favor veterans who have lived in San Diego longer than many active members. There was a 76.3 percent increase in refinances in San Diego for the first six months of this year, compared to the same period last year. It reflects national trends of more refinancing loans than purchases during much of the pandemic.

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Most purchase loans in the first half of 2021

Washington-Arlington-Alexandria, DC-VA-MD-WV: 6,805

Virginia Beach-Norfolk-Newport News, Virginia-NC: 6,752

San Antonio, Texas: 5,114

Dallas-Fort Worth-Arlington, Texas: 4,658

Phoenix-Mesa-Scottsdale, AZ: 4,414

Atlanta-Sandy Springs-Marietta, GA: 4,197

Houston-Sugar Land-Baytown, Texas: 3,735

Riverside-San Bernardino-Ontario, CA: 3,435

Tampa-St. Petersburg-Clearwater, Florida: 3,397

Colorado Springs, Colorado: 3,395

San Diego-Carlsbad-San Marcos, CA: 3,237

Jacksonville, Florida: 3,167

Las Vegas-Paradise, NV: 3,061

Seattle-Tacoma-Bellevue, WA: 2,468

Source: United Veterans

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