EP82 - Interview With VA Loan First-Time Home Buyers – How They Bought In BANANAS 2022!

Today is one of my favorite types of episodes. This is a real life story from a real life couple who closed on their first home using a VA loan in 2022. And I'm very excited to share it with you. And if you guys want to hear more stories, not just from me, but from real life home buyers, all you got to do is smash that, like, button, hit those notifications, click that bell, and you'll be the first one to know when. We've got current market information coming out for you. First time homebuyers Ken and Danielle. Say hi to everybody. Say hello to the world.

Hey.

Hello.

Hello.

Now they have a home and they're zooming from two different places. So I have to ask you, are you zooming in two different rooms or is one of you at a job because you have to pay for a mortgage?

Yeah, the latter.

Yeah.

So I'm actually a reservist with the Air Force. And, and so I've been flying back and forth between Maryland and Dayton, Ohio, where I do my, my duty at. Are you on almost two years now.

Wow. Are you on your, your two weeks active? Cause you're reservist or you're just going back?

That's right.

You're on your active now.

Two weeks active. Okay. Yeah. So I just did my weekend this past Saturday and Sunday, and then this week I'll be here for five days and then I'll travel back home to Maryland. Looking forward to being home with my wife and my, my little one.

Wow. How old?

Daughter.

How old she is?

11 months.

Wow.

I'll jump into that first. You're the crazy people that bought a home with an infant. How did that go?

Tell us about, talk about triage. How do you see homes?

How do you go look at homes when you have an infant? Did you do the one stay in the car thing or how did you do it?

You know, it worked out well where she was at school a lot of the day, and we would go see Homes with Kate during the workday and then we would pick her up. But there was a couple Saturdays where we went to some open house and she came with us.

I mean, okay, I've got to ask, because you said it. I know my listeners. You said 11 months, right?

That's right.

School.

She's 11 months now.

Well, okay. So I call it school because she does learn.

Okay. I just wanted to make sure. I was like, I've been through. I got two. I know preschool doesn't start till three or four, y'.

All. No, I like to get in the habit of calling it school. Because she does learn there. So it's not just someone the kids over watching TV and, you know, kids are just tearing up the house. No, she's learning. So cool.

Ken, did you rock the Baby Bjorn when to look at houses?

Oh, absolutely. Yeah, absolutely. Yeah. And then there are a few times where we took the. The car seat as well. Right. Because you can't get through the door with the car seat. That's a problem right there. Yeah. So, you know, it's. We can't. We can't move into it if we can't get through the door with the car seat.

Well, and then when you look at houses, you do a couple bicep curls with the car seat.

He did all that.

Okay, so.

So tell everyone your story. When. When did this whole process start for you?

And I'll let you start with the timeline.

Raising her hand.

Remember the year. Yeah, go for it, love. Yeah. Because I'll. I'll let she. If she lets me tell the story, I'll embellish. And in her eyes, I'll get it all wrong.

No, not all wrong. Initially, it started in July. No, actually, it was late June of 2020. So in the thick of the pandemic. And we have a couple friends who were looking at homes and had bought a new build, and they were telling us about it. So, like, all right, let's go take a look at it. Went to take a look at it, and we really liked it. But the timeline was very quick. Like, you gotta. There's only two more left, and you gotta get it before it's gone. And so we said, all right, well, let's give ourselves 30 days to see if this is what we're gonna do, because we had not looked at buying a home before that time. So we, like, spend time doing all this research, watching YouTube videos of the VA loan and that process and looking up home buying courses. Just, you name it. We were looking into it the second week in July. We were going to Ohio because he was on Air Force duty. And I looked up your podcast, or I looked up a podcast about home buying, and I saw your podcast, and we actually listened to your podcast on the way to Ohio. And we were like, oh, yeah, this is great information. We can do this. And then maybe a couple weeks later said, well, actually it was Kenneth, and said, you know, this doesn't feel right. It feels like a lot is happening very quickly. And so we decided not to move forward with that new build. Fast forward to November 2021. Little did I know that Kenneth here had been listening to your podcast for, like, a couple weeks. And we were also thinking about the next move for us the following year, where they were going to move into another apartment. So I had been looking up apartments, and little did I know Kent was listening to your podcast, and he came to me one Saturday. I never forget. It's, like, so love. I think we should look at buying a Home. And I'm like, what? Buying a home? Like, where did this come from? He's like, well, you know, I've been listening to Dave, and I just really feel confident that we can. We can buy a home. And I was really listening to the Madison story, and I'm like, she's 24 years old, and she. She bought a home. We can do this. And I'm like, all right, well, let's do it. And so that's when I think I reached back out to you, saying, hey, we're ready to buy. Send us a unicorn realtor. And then you hooked us up with Kate, who was a godsend unicorn realtor, who hooked us up with a unicorn lender, and here we are. We bought a home.

That is. I. You know, I could say thank you. End of podcast. That's it. Did everyone hear that?

Yeah. No. And I will say that's a great summary. Love you. You definitely landed the plane there.

Which is not my typical. Which is why he mentioned it.

Oh, I love Air Force analogies. All right, well, before we. We hit record here, Kenneth was saying that it's the planning process, and maybe you could have done it in 2020, but it sounds to me like what really got it going was when, you know, it's not just all about me and my podcast, but that initiated the research beginning for you.

Yeah, absolutely. Yeah. And I. And I'll say. Oh, go ahead.

I was going to say, what surprised you during the research? Because you obviously didn't pull the trigger on the first one. So once you got into it, and. And I am the. I am the official podcast of road trips. Every time anyone travels somewhere, they're like, we just said, we're going to figure out how to buy a home on the way to Uncle Joe's. So.

No. And I'll say, it happened just like that. Right. We were driving to Ohio this time. Usually I fly, but we decided we binge listened to how to Buy a Home podcast and learned a lot. Danielle took notes on the way there. And, you know, for me, I'm a program manager on the civilian side, so acquisitions is our thing. And so trying to understand the process from the beginning of the process, in its infancy, all the way to the end and to the grave. Right. And I just didn't in the beginning feel like we were getting a very good explanation of how things were going to progress from start to end. And that's one of the things that added to the unease that I had. And so even. And then kind of prior to that, Danielle had been laid off, and so she had gotten rehired afterwards. And so I'm thinking about all these things and bank accounts, finance, you know, is this going to be the best decision for us to make right now for not just Danielle and myself, but for our little one who was getting ready to be brought into the world at that time? And so it just didn't. And then on top of that, it was kind of a high pressure sales technique that I really didn't appreciate either with, oh, well, we only have so many homes left and the price is going to continue to increase as long as you wait. And it's like, okay, then it's. It's just not for us. So, you know, you. You can keep it.

I was just gonna say, I think that's a wonderful point.

Yeah, I.

It's right now, you know, we're recording this in March of 2022, and it's the hardest time for me to help people because I'm totally with you and. But I am telling people, you know what, I wish you started planning in 2021, but you didn't. So here I need you to plan. I need you to binge my podcast, I need you to listen to the newer episodes, and I need you to get caught up in a week because the prices are going to go up now. You know, for you guys, you were fortunate. You know, life happens. I'd love to, you know, have people buy a house when they're super pregnant, but sometimes, you know, that's going to take priority. And the first got you going. And as you were moving through the process then, and you were learning about it for other people out there who are military, tell us how the VA loan affected your decision. Big nods from Daniel, man.

It made it super easy. Right. So, you know, going back to the planning process you asked about initially, we, since we had talked about it previously and the early 2000s, we. We had took a look at our finances and really tried to figure out, okay, well, if this is something we're going to do, where are we going to pull the money at for a deposit on the home? How are we going to pay for closing costs and so on and so forth. So we were already in that mindset. We were already putting money away. Thankfully, we both were working at that time. So we were able to not only buy extra stuff for the Bambino, but also put money away in an account for this future purchase. So although we didn't continue to look at homes, it was always in the back of our mind. It was always something we thought about as far as needing a new place to go because we were in a one bedroom. Me, my wife, and our daughter. Yes, it gets real interesting. Right? And so looking at the VA loan and understanding how it works with regards to not having to put anything down on the loan was just the icing on the cake for us. Right. It definitely opened up the aperture for us to be able to buy a home that we maybe not maybe would have not been able to before had we needed to put a down payment on it. So, yeah, for all the veterans out there, if you're not thinking about the VA loan at this point in time where you're looking to buy a home, you need to be right. If you're not, you're wrong. So get it together.

I'm glad you said it.

Figure it out.

I'm glad you said it. Cause I was thinking it big time. It's just the most incredible loan. And for someone like you, and you guys are such a great success story, the VA loan offers you the possibility of not only an opportunity to have zero down, but you said a couple of great things there, Kenneth. I want people to understand, he said, but you did save for closing costs. What people also need to understand about a VA loan is there's no PMI on a VA loan. It's one of the great. The whole program is fantastic and there's just great rates. And you know, you guys. But tell me about this, because I know Danielle was so nice to talk about the unicorn team that helped you. I have people that are calling me right now saying I keep getting beat by people with 20% down. There's no way for me to get a house with 10% down or 5% down or 3% down. You guys put zero down and got a house in the middle of this crazy market. How did, how did you pull that off?

For me, that was a slight concern, especially as we got into the process of looking at homes. And when we put in our first offer and we thought it was a really strong offer, of course we offered over the sale, the list price, and it came back that we were beat out by Someone else who basically waived everything and put down a down payment. And so I became a little discouraged because Kate, she was real with us. She said that it's hard having a VA loan because you can't waive the appraisal. Like, the VA has to do the appraisal, and that's something that we couldn't waive. So I got a little down, but she was like, no, it's okay. We're still in the. You know, you just put an offer on your first house, so, you know, it's okay. And then the second home we saw, we loved, and it's actually five minutes from where we used to live.

Oh, wow.

Yeah. Just so funny. Well, we saw it, we loved it, and again, put a very competitive offer in. And I don't know why, but the owners, they accepted it. I can't explain why. We did write, like, a little bit of a note, but it was really, you know, blue wall is beautiful. First time homeowners with a little family. That was it. But they chose us for whatever reason. Doesn't matter. I'm very grateful.

I'm sure it had to do with. I mean, you already praised the unicorn team.

You had.

I'm sure that your. Your offer was presented strong.

Yes. And I meant to mention that our lender did call the realtor, and I don't know what he said, but he called and I'm like, oh, that's great. He called them.

I'll tell you what he said. All those other offers you have on paper, those people just clicked Rocket Mortgage and got a pre approval. I'm a real person. This is. I'm a real lender. I have seen their finances. I have looked at everything about him. She's an amazing individual who lost a job during the pandemic, got pregnant, and still got a job back. So she's very employable, all those things. The presentation of the offer speaks volumes, and that's incredible. Okay, so besides figuring out that you should plan, and I applaud the people who just go out and like, let's go look at houses, let's see what happens. Were there any other things that surprised you about the process that you thought, oh, I never knew about this or I never knew about that.

One thing for me was how quick it was and not the process of looking at homes. Like, we looked at over 200 homes online. Like, that was brutal. But the process from putting in an offer to closing was. I don't know why I thought it so long, but it took 30, less than 30 days over the Christmas holiday, we were able to close on the home. Something else that surprised me was how long the contract was, number of pages. I thought it was just, you know, the realtor calls and say, hey, we'll put an offer in. This is the amount. And she sent it to us. I'm like, oh man, we gotta read all this in like an hour.

And that, and that's what I'll piggyback on. It was the amount of information you have to consume in a short period of time. Right. Because everything, when you are in the, how do you say, the contract closeout phase you are on, each day is a delay to your closing day. So you're constantly trying to, you're getting documents through the email, you're looking at those, you're signing them, you're sending it back to your lender, your realtor team, and they're pressing on to the next task. And so I think that was the thing that was a surprise to me was the amount of information you had to look over and, and try and make sure you understand well enough before you put your name on it. I think that's the big thing for me. My, my folks, when I grew up were a huge proponent of telling me, don't put your name on something you don't understand.

And then you got an offer accepted and you got a whole bunch of docusigns where they said, just click the button. Just click the button.

Right?

Yep.

Yeah. So, you know, they're, they're looking at me like you're, you're going to read through every page. Yes, yes, I am. You know, I might have been up till 2am but I read through every page.

That brings up a really great point, something that I think a lot of our listeners can really benefit from. When you're working with a unicorn realtor, you know, be prepared. It's going to go fast. Really, really fast. So one of the great things you can do is once you get going with the unicorn, you can ask them. And I'm starting to do this more and more this year. Say, hey, would you send me a blank contract? And, you know, so at night when you're looking through, on Wednesday night, you're looking through all the homes to look at, stop 10 minutes earlier than you usually do and read two pages of the contract and then do it again on Thursday night and then Friday, finish it up and then Saturday go out. Probably the reason it's not, we're not doing that as often right now is because we know that you guys are going to write Three or four or five offers because the market's so competitive. But that is a great tip for people. And the other great tip that you guys mentioned, and this is why I love doing these interviews like this, because I do this every day. I give a speech to everybody when we get in to say, okay, the next 10 days are going to be. I call it the paperwork avalanche. Once you get that offer accepted, it's just like, boom, disclosures. And then your lenders, like, give me all your tax forms. I need hair from your baby. I need to see every receipt you ever had. And it can get really intense. So be ready for it. Be ready for.

Was almost like hazing.

Yeah, it is. And it's so funny because in this market, they act. They're so like, oh, you're so lucky you got a house now do all this, and then they throw all that stuff at you.

Yes, yes. Very grateful for our team.

How about the home shopping process? Any tips for anybody out there who's getting ready to get out there and do it now? You guys did it during the holiday season. Were there any. Any did you do driving around and looking at neighborhoods first? Were you very. You said it was five minutes. So you were very familiar. You know, any kind of general tips for anyone who. To help them when they're out looking, Whether it was Internet sites that you enjoyed or just, you know, times of day just to go look at places. Any of that stuff?

I'd say have a list of things that you want. Danielle did a really good job of putting together a spreadsheet that had a few things in that. That we talked about that we wanted in a home. Right. At least needed to have three bedrooms. It needed to have two bathrooms. Two of those bathrooms needed to be on the same. The laundry room had to be on the same level as the bedroom. So just all of these.

You got laundry room. You got laundry room on the. On the bedroom level?

Yes, yes.

That's like gold in California.

Yeah.

All downstairs. My gosh. My wife would pay a gazillion dollars. She keeps asking me to move it upstairs.

Yeah, yeah. Just put that add on on the outside of the house.

Okay. So on the flip side, what'd you give up? Was there anything you gave up and why?

We gave up a yard.

And why.

I'll say why. For me, I think Kenneth may have his own why. For me, the home, it's a townhome. The home had everything that was on our list, from the two car garage to the laundry on the bedroom floor to the number of bedrooms to having an office. Like everything that was on our list was there. And the neighborhood also was. We wanted it to be at least 20, 25 minutes from where our daughter's school is. That was definitely on the list and it checked all the boxes except for a yard, but we have an in unit, so that means a yard is right next to our house. So it's not our. Just our yard, but it is close to our home.

Another great point. And I will throw in my two cents as a person who, when my child was one, turned one back in 2007. We were still in our town home, but my wife had the forethought. She bought it before we got married. So I sold my place and we moved over there and she bought one of the ones that had the green belt in the front yard. So we had the one year old party on our quote unquote front yard. But really we just with it through our HOA dues and. But that's a great one. So neighborhood. So checking all the boxes doesn't necessarily mean checking all the boxes. It's checking most of the boxes.

Yeah, absolutely.

Yeah. I think maybe one of the biggest things. Oh. That I want to add when talking about that list is be realistic with yourself. I can't recall how many times Danielle asked me, am I sure that I want X, Y and Z? So I work in downtown D.C. and so for me it's pretty important to be able to jump on the metro and head down to work so that I don't have to sit in traffic. And so being near a metro where we're within walking distance is most ideal. And I know we were looking at some places that were about 10 to 15 minutes away from a metro driving wise. So, you know, you can just double that if you're talking about walking. But I would say definitely be realistic with yourself when creating that list. And you know, it doesn't need to be your dream sheet, but at least understand at a minimum what it is that you want in a home. As far as things that we gave up, I can't say that for me, okay. I would say appliances were things that I let go. Right. So one of the. I guess one of the no nos that we did in our negotiation process is waive the home inspection. And we kind of took a calculated risk on that, I think because the home was built in 2005. And so my. My thought process and talking with Kate, our realtor as well, is like, okay, so the home's been around for almost 15, 20 years. Yes. There could be some issues. Yes, Things are probably going to begin to break. Water heaters, furnaces are probably at the end of their life. But let's put an offer in, going into the door, knowing those things, and we can handle those on the back end if they begin to fail or something of that nature. I think that was one of the things that made our offer really strong, as well as utilizing the. What's the name of the strategy where you price Escalation.

Yeah, you did the escalation.

Absolutely. Yeah. But because I. I didn't. I didn't like that we lost on the first offer.

And he's very competitive.

Yeah. And an escalation clause for. For those of you out there listening is when you put in an offer and you know it's going to be a multiple offer situation and you say, we will match or beat another offer, or, you know, let us know what the other offers are, and we'll maybe go up 1,000 or 2,000 more, as opposed to just saying, okay, here's our first offer. And then they say, here's a multiple counteroffer, they call it. Instead of you just saying, okay, we're going to offer 10,000 more, you say, we're going to offer 10,000 more. And then some of them might be structured like you would say, we're going to offer 10,000 more and we'll offer up to 5,000 more. The next offer, up to 600, or whatever you want to, you can cap it, or you can just say, I don't care what it is, whatever the next offer is, we're going to go. But I'm sure you guys had to be wary and make sure that you still have your appraisal as part of it.

Right, right, right. And we weren't in the business of writing a blank check, David.

Yeah, well, you can't, because you have it to get an appraisal, so.

Right, right. Yeah. So we have a downd and a cooktop, and those things were needed to be replaced as well as the dishwasher. So we were able to ascertain that during a walkthrough of the home, though. So we just kind of went into it knowing that we were gonna have to buy those things. And so luckily.

Yeah, I was just gonna say, I know it's silly, and I. Sometimes I feel like I don't have to. I think, gosh, I don't really have to tell them this, do I? But when we're talking about a brand new home, when you're talking about the commute all I'm thinking is not stuck in traffic. I'm thinking about half an hour a day or an hour a day away from the little one. And however much those appliances cost for you for seven hours a week, five hours a week that you could. I would have bought a $25,000 appliance package to have that time with my infant.

Yes.

Maybe not my teenager, but. No, he's great.

He's great.

Yes. Could I comment on the appraisal part?

Yes, please. Everyone wants to know about this.

Yes. So the va, of course, they did their appraisal, and they appraised the home for 25,000 more than what we put offering on.

I'm sorry, did you hear that?

Yeah. 25,000 more. Yes. And we were, of course, we were so excited that, one, we didn't have to pay the appraisal difference if there was any, and two, we have a home that has equity in it going into it.

That is called instant equity. And when did you close, Danielle?

January 4th.

And today is March 14th. So let's see if you had $25,000 on the day you closed. There you go. Happy housewarming gift. There's your appliances, by the way. Kenneth.

There are some other things I want to do to the kitchen as well. Yeah, we said that we would give it a year, though.

Well, here's the great thing.