Photo by Les Stukenberg.
Originally Published: January 10, 2017 6:01 a.m.
PRESCOTT — Two little girls frolic with a dog in the backyard of a four-bedroom Granville home in Prescott Valley, the father of one taking a break from his home office to visit with guests in the just decorated living room.
Matthew Fay, a U.S. Navy veteran, admits settling into the 2,000 square-foot house is a work in progress. He and his wife, Trish, and 7-year-old daughter, Olivia, moved in just before Thanksgiving after leasing for three years.
Fay is one of 1,194 Prescott veterans who in 2016 financed a new home with a VA home mortgage loan, 25 percent of which is guaranteed through the federal Department of Veteran Affairs.
The popularity of the VA home loan benefit started back in 1944 has seen a serious uptick nationally in the last two years, one VA leader and other approved lenders say speaks to the large number of veterans who wish to become homeowners combined with the government’s willingness to untangle its red tape.
Prior to 1995, the VA was the underwriter for these types of loans. Now the VA provides oversight to private lenders who the VA has awarded “automatic authority” to make these loans to active military, veterans, reservists and National Guard members, as well as for some spouses of those killed in combat, said Jeff Wilson, the VA loan guarantee officer for the Phoenix VA regional loan center.
The VA has some 2,000 lenders who have “automatic authority” to extend these loans, but officials noted 80 percent of the national loan volume is handled by about 10 percent of those lenders.
Rather than a 60-day minimum process, a veteran can now be prequalified in minutes and a loan approved in as few as 20 days, Wilson said.
“It’s a whole lot easier than a lot of veterans think,” Wilson said.
Fay, a self-employed website manager, secured a 30-year, no down payment mortgage of $1,600 a month. The loan was arranged with a three percent interest rate and no mortgage insurance; most conventional mortgages are now at about 3.8 percent. The loan does require a fee of three percent of the purchase price for non-disabled veterans, but that is rolled into the life of the mortgage.
This is not the first time in his adult life that Fay, 49, bought a house with the use of a VA home mortgage loan, but this time he arranged it through Veterans United, a VA loan industry leader. Their expertise was “amazing,” leading to a glitch-free lending and closing process.
“We kept waiting for the next shoe to drop, and there was none of that,” Fay said.
In Yavapai County, primarily Prescott, VA home loans have seen about a 74 percent increase in just two years, Wilson said. In 2014, 664 veterans bought homes with VA loans, with that number growing by about 500 in the following year to 1,194 loans in 2016, From October 2016 to Jan. 5, 2017, some 437 loans have been processed, and expectations are that could triple by year end, Wilson said.
“The growth we’re seeing in Prescott mirrors what is happening not only in Arizona but across the nation,” Chris Birk, director of education for Veterans United Home Loans, one of the nation’s top 10 VA home loan lenders. “Military members and their families are flocking to this benefit in a way that they haven’t before.”
Arizona’s VA home loan volume has jumped from 15,920 in 2014 to 27,670 in 2016, with Wilson expecting that number to rise to about 39,000 this year. In 2016 nationwide, there were 707,000 VA home loans approved, with 30 percent of those in this state, Wilson said.
Another part of the resurgence in this loan’s popularity for veterans is likely tied to the housing crash a decade ago, Birk said.
“Active duty military and their families can face unique financial challenges that can impact their credit and finances, and it can put conventional financing out of their reach,” Birk said.
“We’re really proud of this benefit,” Wilson said.
This is a chance for men and women who sacrificed for their nation to “own a piece of the American dream they fought to defend,” Birk concluded.
Click the link below to view an interactive statistics map showing the rise in the number of VA home mortgage loans: