Let Us Serve You…with the American Dream

05/28/2012 8:45 am EST

Focus: REAL ESTATE

Terry Savage

Author, The Savage Truth on Money

Military personnel can take advantage of special programs that can drastically reduce the upfront costs of home ownership. It’s the least we can do to say thanks, writes MoneyShow’s Terry Savage.

Memorial Day is the time for honoring our veterans, those who gave their lives for our freedom, and those currently serving us in the military. So it has become a tradition of this column to write about some of the special benefits our country offers to these brave people—although a few financial benefits could hardly be enough of a thank you.

A generation of Americans went through college on the GI Bill. And there are many benefits that help former service people today. A look at www.GIbill.va.gov will give you a listing of some of the possibilities. Many of the educational benefits were enhanced after September 11, 2001, including full tuition and fees paid at in-state schools for qualifying veterans.

Military Mortgage Deals
One of the most attractive GI benefits is the VA mortgage program—a 100% financing (no down payment) mortgage that carries a 30-year fixed rate of 3.75%, for veterans with credit scores over 640.

It’s a deal that can be used, and re-used for subsequent home purchases, and even refinancing, if you’re a vet. I’ve written about this program before, and you can search for details in the archives at TerrySavage.com.

But now many states are offering special new mortgage financing deals for veterans, active-duty military personnel, and National Guard members. Eight states (Illinois, Indiana, Iowa, Ohio, Wisconsin, Missouri, Georgia, and Washington) have created mortgage grants designed for veterans, which can be accessed through each state’s Housing Development Authority.

Almost all of the remaining 42 states have general down-payment grant programs that can be used with the VA loan. These special new deals vary by state.

Welcome Home Heroes in Illinois
As one example of a leading state program, the Illinois Housing Development Authority has a new $100 million mortgage grant program, which just started in 2012. Very few people seem to know about this program because only $14 million has been used so far!

Here’s how the Welcome Home Heroes program works:

  • A $10,000 forgivable loan grant, to use for your down payment.
  • 30-year, fixed-rate mortgage at 3.75%
  • An optional Mortgage Credit Certificate, which can increase your federal mortgage interest deduction by up to $21,000 over the life of the loan
  • Eligibility: Army, Navy and Marine veterans (with service equivalents shown on DD#214), regardless of previous home ownership. Active military members, National Reservists, and Coast Guard must be first-time homebuyers to receive the credit.
  • You must live in the home for at least two years after purchase.
  • Income and purchase price restrictions apply. (For example, a family of four living in Chicago cannot have income exceeding $104,720, or a purchase price exceeding $373,600.) These guidelines vary depending on family size and type of property.
  • You must contribute $1,000 of your own money to the purchase price (or 1% whichever is greater).

The first step toward receiving your grant—which is really considered a two-year loan with forgiveness—is to get pre-approved by a participating lender.

To locate a participating lender in Illinois, go here. Or you can contact my veterans mortgage specialist, Daniel Chookaszian, who always keeps me apprised of new veterans mortgage opportunities, which are his specialty. If you don’t live in Illinois, Chookaszian can point you toward similar programs in other states.

And he has a tip for those participating in the Heroes mortgage program. The Web site specifies that the grant money can be used either toward the down payment or for closing costs. But since most buyers these days ask the seller to pay for all closing costs, make that request of the seller. Then the grant money should be put toward your down payment.

Yes, this program is complicated, which is why you need a knowledgeable guide to get you through the approval process. But for those who qualify, the Welcome Home Heroes grant could make all the difference in becoming a homeowner.

And if you happen to become one of those lucky new homeowners through this process, I’d love to hear from you and do a story about your experience.

The Welcome Home Heroes program is a small enough thank you for your service, which is allowing Americans to spend Memorial Day having picnics and parades and ball games and auto races. Sometimes we forget what this holiday stands for. And that’s The Savage Truth.

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