Using your VA Home Loan Benefit to Relocate to California in 2022
Even after the mass migrations of 2020 and 2021 we are still seeing people relocating to California for a variety of reasons. For those of us in real estate the top 3 reasons we have relocations to California are retirement, PCS (Permanent Change of Station for military personnel), and job change/corporate relocations. Let’s review each of these on their own merits and talk about how to help you successfully move from anywhere in the U.S. and plant roots here in sunny California.
It comes as no surprise that analysts have begun referring to the mass retirements over the past 24 months as the “great resignation”. With wild swings in the workforce opportunities across the country, large swaths of Americans who were already within 12-24 months from retirement took their window of opportunity when early retirement was offered by their company. For those of you who have retired from your civilian job and have VA eligibility this is a fantastic window to leverage low VA rates to purchase your retirement home. It comes as no surprise that California is one of the most sought-after states to retire in. Beautiful beaches, great year around weather, variety of amazing cities to choose from, California is the ultimate retirement destination for millions of Americans.
What should you do? Be sure to organize all your financial documents and have full understanding of what your purchasing power is well before shopping for a home. Moving into the retirement stage of life requires factoring in several financial variables into your decision compared to when working and receiving monthly income. We recommend your meet with your local mortgage expert 3-6 months in advance of your desired purchase date so that you are best poised to successfully move into a new home with financial comfort. Even more so if you will be on fixed income throughout your time in retirement.
Permanent Change of Station is a process where our armed forces relocate troops and families for their designated reasons. This season typically sees large groups of families relocating throughout bases in California. Military members who used their VA entitlement out of state may or may not have to sell their home to use their VA entitlement here in California. If you are moving from a lower cost area to a higher cost area in California, it is possible to still have remaining VA entitlement that can be used towards your new purchase. Be sure to talk with your VA home loan expert so they can look up how much entitlement you have remaining before you begin a home search in California.
What should you do? First things first, determine your timeframe for relocation and communicate that with your local mortgage expert. The months leading up to this relocation window will dictate the speed at which your loan approval and purchase escrow will need to be conducted. As soon as you have your orders, connect with your VA loan expert, and begin the loan approval process. Be prepared to review your Certificate of Eligibility (COE) to ascertain how much entitlement, you have available to you for your California purchase.
Although some major companies, like Tesla for example, moved their way out of California to greener pastures of Texas the majority of large cap and mid cap companies that reside in California are staying in California. We must remember that California’s population is roughly 40 million, and business services are still required for our remaining population no matter which way you slice it.
Let’s use the example of someone who has spent 28 years of their career as a UPS driver in Arizona. They are staring down the last 2 years of their career before he can drive their final route, clock out, and ride off into the sunset completing 30 years of service. This driver who wants to live out his retirement in the beautiful state of California may seek a transfer to a local distribution center to finish out his final 2 years of service. Although this is just one example, there is the formation of a perfect blend of variables happening all at once. UPS has seen an uptick in deliveries in the state of California with the significant rise in e-commerce coupled with store closures, and public health mitigation strategies deployed by local governments, all which drive more deliveries. So, UPS needs more drivers here in California. The driver who wants to retire here can sell his home in Arizona to get top dollar and bring that money here as a down payment on his purchase here. Before you start thinking this is a dream scenario, it’s playing out. Given the economic opportunity of selling at the top pretty much anywhere in the country, there really hasn’t been a better time ever to sell an out of state home and use that money here in California.
What should you do? If you are relocating or getting a job transfer to California, there are some steps that need to be done in parallel. You will need to secure the start date commitment of your position here in California while also selling your out of state home, packing, moving here, and house hunting. It’s imperative that you have your loan approval completed before entering any purchase escrow. Your local mortgage expert can help you align all the financial moving parts to gain underwriter approval and eventual funding of your purchase loan.
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Rates & Fees Disclosure:
‡ The payment on a $300,000 30-year fixed-rate VA loan at 3.000% with a 80% loan-to-value ratio is $1,292.01 with 0 (zero) origination points due at closing. The annual percentage rate (APR) is 3.235%. Payment does not include tax and insurance premium impounds. The actual payment amount will be greater. By refinancing your existing loan, the total finance charges may be higher over the life of the loan. Some state and county maximum loan amount restrictions may apply. Appraisal fee of $600, Processing Fee of $895, Underwriting Fee of $795 included in APR calculations with borrower paying 0 (zero) loan origination points.
‡ Based on Mortgage Heroes internal data.
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Mortgage Heroes has been helping Active Military and Veterans for more than 15+ years. This page is made to help all military families get the answers they are looking for when it comes to housing. Whether its questions about using your VA or new listings in SD, Mortgage Heroes are here to support just as each military member has supported this country!
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