Does a VA Loan In San Diego Make Sense?

San Diego may have one of the largest military concentrations in the country, but they don’t settle here as much as some areas.

The top spots for VA purchase loans in the first half of 2021 were Washington, DC, Virginia Beach and San Antonio, according to a study by loan service provider Veterans United. The San Diego metropolitan area ranked 11th on VA loans.

VA loans are mortgages guaranteed by the US Department of Veterans Affairs that usually do not require a down payment. It can be used by veterans and active service members. The VA says about 90 percent of their loans are made without a down payment.

After sales slowed dramatically in the first half of 2020 due to the pandemic, almost all metropolitan areas saw a significant increase in lending at the beginning of 2021. The San Diego metro used 3,237 VA loans in the first six months, an 8.2 percent increase from a year earlier. The areas with the strongest growth were New York-Northern New Jersey (up 39.14 percent), Anchorage (33.2 percent) and Savannah (28.92 percent).

Chris Birk, vice president of Veterans United Home Loans, said one reason there may be fewer loans available in San Diego is because of the high number of active service members, which means the population is more temporary. Washington, DC, for example, consistently has the most VA loans because of the growing number of active military and veterans there. Another factor is the surge in home prices in San Diego, which can make it difficult for some veterans to buy.

The average price of a home in San Diego County hit a record $ 725,000 in May, up 23 percent in a year. For an active-duty member currently on duty, buying a home at the average home price with no down payment with a 30 year loan period could be more than $ 4,000 per month.

Active military personnel in San Diego receive a monthly housing allowance, which could make it cheaper to pay. The lowest member in San Diego gets $ 2,691 a month with loved ones and $ 2,019 without. The most senior civil servant receives $ 3,828 per month with loved ones and $ 3,330 without. Another thing that helps with the cost is that VA loans do not require private mortgage insurance, as is the case with many other low down payment mortgages.

Samantha O’Brien, a real estate agent at PorchLight in University Heights, said this made things more difficult for some military personnel last year as house prices soared. She said she worked with service reps looking for a place in San Diego but decided it would make more sense to go somewhere else where they can get more for their money.

“For those who don’t end up buying, I hear, ‘I can go back to Texas and buy a bigger place,'” she said, “or ‘anywhere else in the US.'”

O’Brien said that many of the people who choose to move to another state even though they are currently stationed here are looking for space for families and usually like to have a bit of land. She said many military personnel would choose to rent and wait to buy something from the area when their service ends.

Not all of them rush out of America’s finest city, however. O’Brien said she took out four VA loans last month that were a mix of younger service members buying condos and senior members buying real estate with the intent to retire here.

Coast Guard veteran Tony Rector bought a $ 850,000 single-family home in the Del Cerro neighborhood with a VA loan in July. Since he is no longer in active service, he does not receive any monthly housing benefit. He plans to have three roommates, however, and his job as a dealership financer will help him make the payments.

“It’s just a much better option,” he said of a VA loan. “That’s why it’s a privilege for us.”

Unlike many military personnel who are from out of state, Rector grew up in Lakeside knowing he didn’t want to leave – even if he could use that VA loan to go to a location outside of state.

“It’s my city. I love it, ”he said.

Another factor that may reduce the number of VA purchase credits in San Diego County is the growth in cash offerings as the competition for homes continues to be fierce. Jan Ryan, a RE / MAX agent based in Ramona, said sellers have turned down both VA loans and FHA (first-time buyers) loans for cash buyers in many of their bid attempts.

While the seller will receive the same amount of money, many local agents say sellers will accept cash offers to ensure the purchase is made in trust. It makes sense for sellers as the VA loan requires a valuation that is not required with a cash offer. So if the valuation is below the asking price, it is possible that the loan will not be approved.

Ryan said cash shoppers are not always the safest option in her experience. It’s more likely than a military family to ask for last minute concessions or just walk away.

VA loans are also used for refinancing, but are likely to benefit veterans who have lived in San Diego longer than many active Soldiers. In San Diego, refinancing increased 76.3 percent in the first six months of this year compared to the same period last year. It reflects national trends as more loans are being refinanced than bought during much of the pandemic.

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Most purchase credits in the first half of 2021

Washington-Arlington-Alexandria, DC-VA-MD-WV: 6,805

Virginia Beach-Norfolk-Newport News, VA-NC: 6,752

San Antonio, TX: 5,114

Dallas-Fort Worth-Arlington, TX: 4,658

Phoenix-Mesa-Scottsdale, AZ: 4,414

Atlanta-Sandy Springs-Marietta, GA: 4,197

Houston-Sugarland-Baytown, TX: 3,735

Riverside-San Bernardino-Ontario, CA: 3,435

Tampa-St. Petersburg-Clearwater, FL: 3,397

Colorado Springs, Colorado: 3,395

San Diego-Karlovy Vary-San Marcos, CA: 3,237

Jacksonville, FL: 3,167

Las Vegas Paradise, NV: 3,061

Seattle-Tacoma-Bellevue, WA: 2,468

Source: Veterans United

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