To learn more about VA loans and the impact of LendUS’s participation in Lifetime’s show Military Makeover, we spoke with Gilbert, AZ Branch’s Area Sales Manager, Jared Paul. As a Loan Officer, Paul has been working to help homebuyer consumers, especially those who have served like himself, get the right mortgage loan program they can qualify for. Paul was on active duty in the U.S. Marine Corps from 1992 to 1996 and was on inactive status from 1996 to 2000. He has been working in the mortgage industry since then for 21 years now and counting.
This transcript of the interview below has been condensed and modified to be more concise.
Had you heard of Military Makeover before working with them?
I had not. Military Makeover was something LendUS brought to the table. They gave me a call… and were picking my brain… So Military Makeover excited me because it is dealing with a group of people that I feel I am a part of and that I represent. When [LendUS] started talking about doing this, all I said was “I don’t care where you all want me, just let me be a part of it.” So we did the first [episode] and it was fantastic and I’m looking forward to the next three or four.
What are you hoping viewers and other veterans get out of the show and the participation with LendUS?
I want them to see that we support the communities that we serve including the veteran community that is truly underserved. VA loans, in general, have a lot of misinformation about them. A lot of people don’t necessarily understand that you can use them a second time or [what] the funding fee [is], and VA disability compensation and how that impacts the funding fee. I want to make sure we show support for our communities, support for our veterans, that we show as patriots for the country in general, but also that we show as advocates for veterans… We are not participating [in Military Makeover] as something that is going to generate the company money, but something that shows that our company is supportive of veterans and the communities.
When you entered the U.S. Marine Corps, did you know about benefits like the VA loan? Do you think many servicemembers know about the benefit before or after their duty?
No. That is something that is truly underserved. So going in, the one thing that [the military] sell[s] everybody on, because most people that join the military are college age, is the G.I. Bill. “Come to college for free, we’ll pay for your college.” That’s really all you hear about. I think when veterans get out of the service, the exit interview process leaves people wanting… There should be somebody there that represents the disability compensation, another to represent the VA G.I. Bill, and someone else for the VA loan… I think quite a few veterans don’t understand the benefits that are available to them. Part of it is, in my opinion, the armed forces are a little hesitant to let veterans know that disability options exist for them because when a veteran is awarded disability compensation it tends to be for life which can get expensive. I don’t want to say that the military branches aren’t doing it correctly, but I believe in my heart that maybe they aren’t pushing it as hard as they could to veterans because of the cost that is associated with it.
What can Veterans expect when going down this road to get a VA loan compared to an FHA loan or conventional loan?
There are two sides to this equation. The first one is the bad parts. The bad part is that realtors have a bad opinion of VA loans. They think that VA loans are tougher to do. Don’t listen to a realtors’ explanation of VA loans. Their expertise is in housing market. The only reason a realtor should not accept a VA loan is if the home doesn’t meet VA standards [for health and safety requirements]. I have to educate a lot of realtors. They will post a listing and say “Not accepting VA loans.” I say to them, “Do you really want your reputation to be that you don’t want to work with veterans? The only reason that you should be excluding the property from veterans is if it has health and safety issues. Do you know that there are programs like Buy Before You Sell that will allow you to fix the home so now you can market the listing to everybody?”
The positive part is that the guidelines are less restrictive for veterans than they are for almost anybody. I got a loan approved yesterday at a 61% debt-to-income ratio (DTI) through the AUS (automated underwriting system) because it had sufficient residual income for the borrower. That doesn’t happen very often but I got one done… I can do 100% financing for veterans meaning they are coming in with zero money down and with the new guidelines there is no loan limit restrictions to that. I happen to have a veteran, a chief and war officer who is retired, whose wife is a high-powered attorney. They bought a $1.3 million home zero dollars down.
The other part is that VA loans happen to offer pretty good SRP (service release premium) that allows [lenders] to pay some or all of the veterans’ closing costs. In the past year, I’ve probably done 20 VA transactions where the [client] brought in zero money to close and zero funds for the close costs because at the rate I was able to get them, we were, as the lender, able to cover all of their closing costs. I got 20 veterans into their homes with zero money out of their pockets. With rates continuing to drop, I went back to almost every single one of them and dropped their rate a half a point or more through a VA IRRRL… That is a win-win.
Are there any Veterans where the VA loan might not be right for them?
Any veteran that has a service-connected disability, meaning that they don’t have to pay the funding fee, they should always do VA… and VA rates, in my experience over the last seven years have always been the best rates on the market. [However] If you have a client that happens to have 40% or 50% down, in those instances if they don’t have a service-connected disability, it might make more sense for them to do a conventional loan because the cost of the VA funding fee can be pretty large. But you have to compare and contrast that. It varies by veteran. It is very rare that an FHA loan would be a better option for a veteran over a VA loan, but I can see instances where a conventional might be.
In relation to Military Makeover, how do you hope the show, LendUS, and your participation can help dispel some of these misconceptions around VA loans?
I hope that every chance we get to be on Military Makeover and when we get facetime with the camera that we get to educate veterans. In the first show we talked about the fact that veterans can use the VA loan more than once. I don’t know what the statistic is but I would bet that 75% of veterans think that it is a one-time use program. Well, if you pay off that loan and you restore your eligibility, you can use it for an unlimited amount of times.
The next show I’d like to talk about…understand[ing] that you can get [a VA loan] with zero out of pocket, 100% financing, lenders can help cover closing costs, and with service-connected disability ratings you could avoid the VA funding fee. There are a lot of things we can educate them on. We need the facetime to let the veterans know that LendUS is an advocate [and education source] for veterans and pick one specific topic each time we are on camera and focus on it.
What do you think is the biggest mistake veterans make when going into a VA loan?
You don’t see a lot of mistakes with veterans the first time because the first time you use it you don’t know anything about it. You just need to make sure you find a Loan Officer that can explain it to you and make sure they are doing it to the best of your personal situation. The biggest mistake veterans make is, I have seen veterans go out and take an FHA loan or conventional loan the second time at a higher interest rate and not get help with closing costs because they thought they could only use their benefit one time… I want veterans to know that they can use it multiple times, especially for veterans with any service-connected disabilities.
Do you have advice for Veterans before seeking a VA loan?
Connect with a Loan Officer. It doesn’t even necessarily have to be the person that you are going to use. Integrity is a big part for veterans. They don’t always find that with the first Loan Officer that they speak to. There might always be that connection, but there is a lot of online misinformation, as well, about VA loans as much as there is good information out there. They need to connect with a Loan Officer that understands VA loans, that has experience with it and can walk them through the process. [To] Loan Officers out there [you] also need to understand that if you’re choosing to deal with the veterans, it doesn’t necessarily mean you’re going to earn their business. Just be an advocate for them, an education source for them, and hope that they find the right person to work with. Through educating them and showing them your knowledge, hopefully we get the opportunity to do that but that shouldn’t be the end goal.