VA Loans (A Personal Story): Air Force Vet Builds A Real Estate Portfolio
The "Great" VA Loan Program
If ever there were a fan club for VA loans, Howard Lovely, Jr., surely would be a member. He might even be club president.
Lovely, 51, likes VA loans so much he's used them for his home, business and even retirement plan. "The VA loan system is a great program if you take advantage of it and utilize it," Lovely says.
Guaranteed by the U.S. Department of Veterans Affairs, the VA loan offers eligible, qualified borrowers an opportunity to buy a home with no down payment, no mortgage insurance, a competitive interest rate and flexible lending guidelines.
"Jet Mech" Buys In Greeley, Colorado
Lovely purchased his home in 2007 through the VA's Vendee Financing Program, which sells homes that are owned by the VA.
The program isn't restricted to military veterans, but Lovely happens to be one. He served as an Air Force aircraft mechanic -- a "jet mech," he says, -- from 1985 to 1991.
Today, he works part time as a mobile notary, authenticating real estate contracts and other documents.
The home Lovely bought is an 810-square-foot split-level residence with three bedrooms, one bathroom and a one-car attached garage on a 6,200-square-foot lot.
It cost $92,950, and it's located in Greeley, Colo., about 40 miles north of Denver.
"Yes, You Can Bid On This House"
Before he bought the property, Lovely had never been to Greeley. He'd owned a home in Mt. Vernon, north of Seattle, and shared a rental home in the San Francisco Bay Area.
He'd also gone through a bankruptcy, was coping with post-traumatic stress disorder (PTSD) and his credit rating was, to use his words, "in the dirt."
"I needed for emotional health reasons to stabilize my housing," Lovely explains. "I didn't know anybody here. I simply moved here for the house."
"I picked the best one that I could find in the price range that was affordable to me, I spoke to the VA, and they said, 'Yes, you can bid on this house.'"
His disability income was no barrier. "People had always said, 'You can't buy a house on disability.' I believed that, too, until this happened," he says.
VA Streamline Refinance With Energy Credits
Lovely now plans to use the VA streamline refinance program to use to lower his interest rate from 3.875 percent to 3.25 percent and finance a replacement furnace and new air-conditioning system for his home.
The streamline refinance, also known as the Interest Rate Reduction Refinance Loan (IRRRL) or VA-to-VA refi, offers easy qualifying guidelines and minimal paperwork and helps VA borrowers get a new loan with a lower rate and payment.
The loan amount can be increased by up to $6,000 for home energy-efficiency improvements. Closing costs can be added to the loan amount or offset by a slightly higher interest rate.
To qualify, borrowers must certify that they currently occupy the home or previously lived there. This refi won't be Lovely's first.
Last year, he did a cash-out and used the money to buy the house next door to his. The home is 1,000 square feet and has three bedrooms, two bathrooms and a two-car garage.
It cost $133,000 with a $129,000 mortgage that Lovely assumed from another veteran.
"I put $3,000 in (the seller's) pocket, and I was able to acquire that property for $5,772.85," Lovely says. "I did the numbers for them, and they came out a little better by walking away and letting me assume it."
Lovely estimates that the two homes together are now worth approximately $250,000. His two mortgage payments, including principal, interest, property taxes and homeowner insurance, total $1,594 per month.
As a rental property, the larger home brings in $1,175, paying for the mortgage and more.
Using VA Loans For A Retirement Plan
Lovely has no plans to sell either of the homes. In fact, he'd like to purchase a few more for his real estate investment company, Lovely Real Estate Investments, LLC.
"If I can find two more properties that are owned by veterans and they no longer want the home, I can acquire those properties via the assumption process. Or I could buy another home on my own with a VA loan, move out of this home and rent this home out," he explains.
Why does Lovely want to own so many houses? They're his retirement plan.
"In 20 years, I will be 71," he says.
"These properties will be almost paid for. They will have appreciated. Whether I am capable of doing part-time work or not, the houses will be bringing in money to pay for food, medical bills and whatever."
This interview is part of a series of stories covering veterans and homeownership. TheMortgageReports.com is honored to highlight these honest, first-hand accounts.
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