A Realtor in Hawaii recently referred clients to me who were “PCSing”—military slang for Permanent Change of Station—to the DC area to be stationed at Fort Meade in Maryland. Their family of 5 kids, 2 cats, 1 dog, 1 bunny, 1 guinea pig and 2 adults wanted to live in an area both with a great neighborhood feel and close to the base.
Ultimately, I helped them find a home they loved in Brooklyn, Maryland with a bedroom for each child as well as the much desired basement space for the parents to use as a second living room space to retire to after a long day.
Of course, we were thrilled when their offer was accepted, but here comes the fun part. Working with an experienced and locally based mortgage broker adept at helping with VA loans, we were able to get more than $14,000 in closing cost assistance from the Seller. This covered the Buyer’s entire closing costs, paying down their interest rate and we were even able to get some of their moving costs they’d put on a credit card—over $2500—paid off as well! Yes! Over $2,500 in credit card debt! Not only did they receive all of these incredible closing credits, they were also paid an additional $5,000 at closing as a credit, a reimbursement of their earnest money deposit.
That means they came to closing with a bill of $0 and they got some of their credit card debt paid off!
This generous deal was made possible because the lender I referred them to understood what the max amount they could receive for closing costs could be in order to use some of the money for other things. I have a good relationship with the lender and communicated with him before writing the offer for my clients, a very important job for a real estate agent.
My clients showed up to closing day with their Uhaul and all of their pets in tow to move in after settlement! We did the closing in the kitchen and they started unpacking immediately afterwards.
Want to know more? Keep reading my quick Q&A with Dan Chapman from CMG Home Loans to find out how the lender scored this great deal for my military clients.
Q: How are buyers able to get money towards paying off their credit cards?
A: As far as I know, the VA loan is the only home loan where seller credit can be used to pay off consumer debt like credit cards or even car loans. Even better, we can exclude that debt when qualifying the buyer, even though it’s not paid until closing.
Q: Is there a limit on how much can be paid off from their credit card debt?
A: For a VA loan, the maximum seller credit toward closing costs and debt payoff is 4% of the gross purchase price. However, one could write into the purchase contract that the seller also pay various 3rd party closing fees like title, transfer taxes etc… thus reducing the buyer side closing cost, and maximizing debt payoff. In this case, the buyer can also have their initial deposit fully refunded at closing as well.
Q: How are you so good at helping clients using VA loans?
A: The use of the VA loan is personal to me as a Marine Corps veteran (Captain) and a 2002 graduate of the US Naval Academy in Annapolis. My team and I have been helping veterans use their VA benefits since 2007.