August 20, 2025 • 24 mins
Ever wondered if your military benefits could do more than just help you buy a house? What if your VA loan could actually eliminate your personal debt while getting you into your dream home? This eye-opening episode reveals a powerful, legitimate strategy that transforms how military members approach homebuying.
We dive deep into the secret weapon within VA loans – seller concessions that can be used to pay off personal debt. Unlike any other loan program, VA loans allow up to 4% of the home's value in seller concessions that can be directed toward paying off credit cards, car loans, or other debts. For a $300,000 home, that's potentially $12,000 to eliminate financial burdens! This strategy works whether you initially qualify for the loan or need the debt reduction to improve your debt-to-income ratio to meet qualification requirements.
The episode breaks down exactly how this works through the VA Lender's Handbook, walking through real-world scenarios and calculations. You'll learn what counts toward the 4% limit, how to calculate potential savings, and the critical differences between using concessions for debt payoff versus interest rate buydowns. We even explore how this approach differs from conventional and FHA loans, highlighting why the VA loan truly stands as the most powerful mortgage option available to service members.
Whether you're actively house-hunting or planning for the future, this knowledge gives you a financial advantage that few military members fully understand. Share this episode with your fellow service members – this information could literally save them thousands while improving their financial future. Remember, you don't have to embrace the suck if you've got the right tools in your ruck!
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Remember, you don't have to embrace the suck, if you have the right tools in your ruck!
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Let me get this thought through.
This works a couple ways.
You have the optimal scenario,which is you go to purchase a
house and you qualify, it goesthrough underwriting, it comes
back, you're good to go and youjust ask for a concession.
Then you have the scenario ofyou go through underwriting and
(00:22):
they kick it back because yourdebt to income ratio isn't good,
and that's the scenario thatyou don't want.
However, with seller'sconcession or concession list,
this is how you can use this toget into the home that you
particularly want to get into.
Welcome to the Roger SarntPodcast, where we talk all
(00:43):
things Army and I'm your host,sarnt Cruz.
And today we are going to bereacting to a video that I found
on TikTok, and this isspecifically in reference to the
VA loan, and this individualtalks about how the VA loan can
be used for paying off debt,personal debt and the reason why
(01:08):
I want to react to this videois because a long time ago, I
purchased this house that I'm in.
Well, almost two years ago Ipurchased this house and I did
the same thing he's talkingabout, so I know firsthand that
this works.
So he's specifically, he'sgoing to be a realtor, he's
(01:29):
getting out the military andhe's putting people up on game.
So when I purchased this housein particular, I had made a
significant purchase, maybe afew months earlier.
Now I knew what I was doingbecause I had heard about this
and, as I'm making payments onthis significant amount, I asked
for the concession and when Iasked her about it she was like
(01:52):
the worst they can say is no.
So she asked, they gave it tome.
I pretty much got a free itemand it's, it works.
So this, this is it.
Here he is.
He's on TikTok.
Let me share my screen there.
Yeah, so you guys can see whoI'm talking about and he gives
some good game.
Let me see where it is.
(02:14):
His name is KhalifaTheRealtor27.
Khalifatherealtor27.
And the initial thing that yousee on the screen is use the VA
loan to pay off personal debtand let's just let it roll.
Speaker 2 (02:34):
So I told you all this last week, but it looks
like I didn't hear it, so I'mjust going to say it again.
You can use the VA loan to payoff personal debt.
I'm going to say that again youcan use the VA loan to pay off
personal debt.
How it works, listen real close.
When you're buying a house, wecan negotiate something called
seller concessions and I'msaying we, because I'm getting
out and I'm a realtor now, butanyway, we can negotiate
(02:56):
something called sellerconcession and that's basically
money that the seller isbasically giving back to you to
help you with, like your closingcosts and some stuff like that.
You know, now the hack is wecan negotiate as much as
possible for those sellerconcessions.
Now the real hack is you canuse up to four.
Speaker 1 (03:13):
Now what I want to do here is he's talking about
seller concessions.
Now, when you are purchase acar, purchase a house, you,
anytime you purchase somethingor you get into a realm in which
you're not familiar with,there's going to be certain
lingo, jargon, words that youmay not understand, and because
(03:34):
of that, I am going to go intothe VA lender's handbook and I
will walk you through exactlywhat he's talking about, because
it's in there, right?
So we're going to have ascenario.
We're going to talk about thepages, because there's two pages
in which cover what he'stalking about.
We're going to give you ascenario on what the VA loan
(03:57):
itself is in four steps on theseller concession and the other
percentage that he's going totalk about in a second 4%, 4% of
those seller concessionstowards whatever you want
personal debt, car payment, adown payment for whatever else,
(04:18):
it don't matter.
Speaker 2 (04:19):
Up to 4% you can use for anything.
Just imagine that for a secondYou're buying a house and you're
still getting money from theseller to actually pay off your
credit cards.
Let's say, Can you imagine andit's one of the reasons why I-
love it.
Speaker 1 (04:34):
He says can you imagine and it's true, right
yeah, think about it.
If you're in a bind I'm in abind, nate If you're in a bind
and you have a certain amount ofdebt, because this works a
couple of ways.
Let me get this thought through.
This works a couple of ways.
You have the optimal scenario,which is you go to purchase a
(04:58):
house and you qualify, it goesthrough underwriting, it comes
back, you're good to go and youjust ask for a concession.
Then you have the scenario ofyou go through underwriting and
they kick it back because yourdebt to income ratio isn't good,
and that's the scenario thatyou don't want.
(05:18):
However, with seller'sconcession or concessions, this
is how you can use this to getinto the home that you
particularly want to get into,and that's the beauty of this
perk.
We can call it a hack strategyperk, whatever you want to call
it, but that's the advantage ofit.
(05:38):
If you qualify, you can ask formore money and pay off debt.
If you don't qualify, you canask for more money and pay off
debt.
If you don't qualify, you canask for more money and pay off
the debt that's holding you back, and then, hopefully, that's
enough and you qualify.
So that's the biggest deal.
And, just like he said, it'sfree money.
But yeah, they're paying you toget into a house, that's it.
Speaker 2 (06:01):
Y'all got to use your VA loan.
It's a beast, it's a cheat code.
This is the most powerful loanand the only loan that's going
to allow you to do somethinglike this.
Nobody else can do this.
He's right.
Speaker 1 (06:13):
You can get into FHA loan.
You're going to give three,three and a half percent.
You can get into a conventionalloan.
The more than likely thing thatyou're going to have to do is
pay 20% in order to not pay PMI,which is mortgage insurance.
It's the bank's way of insuringtheir loan.
(06:36):
So if you don't give 20%,you're going to pay PMI.
If you do give 20%, if I'm not300,000, 20% is probably like
60,000.
And let me know how many of usare just hanging out with 60,000
to put down on a house, on a$300,000 house?
This house is 299.
(06:56):
I put nothing down on it.
Yes, you put the 20% down, yourmortgage payment will be lower.
That is correct.
But there are ways or scenariosin which, if the mortgage
payment is lower because of themoney you put down, you have to
live at a certain amount ofmoney or time in order to get
that money back.
But I digress, let's go back towhat he's talking about.
Speaker 2 (07:19):
You're not just buying a home, You're getting
paid to buy a home.
I hope if I say it like that itwill make sense.
I hope so.
It does not get better thanthat, Can it no?
And right now we are in abuyer's market, which means we
can negotiate as much aspossible.
Right now is your best time asa buyer especially if you're in
the military to buy a house,because we can negotiate as much
(07:41):
as possible off those sellerconcessions.
Speaker 1 (07:44):
Now he's right.
I mean the percentage.
The interest rate is what keepspeople from buying right
Because it's so high.
Even if you do an assumableloan, you're going to assume the
amount of that mortgage at acheap rate, but you still have
to find another loan or come upwith the equity or the rest of
(08:09):
the amount.
So let's say, for instance, ahouse costs $200,000.
The person paid down up to 180,but the assumable would be 180,
but they're selling it for 250.
Now you got to come out of yourpocket $70,000 or get a second
mortgage or loan, whatever it isRight.
So it can be a buyer's market,depending on how you do it, even
(08:33):
with high interest rates.
Even with high interest rates.
Speaker 2 (08:37):
And if you didn't know, now you know, now you know
.
Speaker 1 (08:42):
I love it.
And if you didn't know, now youknow, all right.
So let's, let's go into the VAlenders handbook.
Let's get in there real fast.
Yeah, we're, we're in there.
And this is talking aboutborrower fees and charges and
(09:02):
charges for the veteran borrowerand charges for the veteran
borrower, right?
So the policy is the seller,lender or any other party may
pay fees and charges, includingdiscount points, which we'll
talk about.
What points are on behalf ofthe borrower?
Va regulation limits chargesmade against or paid by the
borrower.
They do not limit the fees ofthe payment of fees and charges
(09:25):
by other parties, right, and alot of times they'll tell you
and I'm not going to get intothis, but a lot of times people
put down on a VA loan and youreally don't have to.
The only exceptions areexcessive seller concessions are
prohibited.
Like, if you're trying to OD onthe concessions, it's just not
going to work out, right, we'regoing to go into the next
chapter, chapter five.
(09:47):
Let's go here we go Seller'sconcession.
So what's the definition of theseller for the seller's
concessions?
For the purpose of this topic,a seller concession is anything
of value added to thetransaction by the builder or
seller for which the buyer paysnothing additional and which the
seller is not customarilyexpected or required to pay or
(10:11):
provide.
An example of that can be theclosing costs.
Right, you're expected to pay aclosing cost, it is what it is.
So, whatever that percentage is, you pay it and then you move
forward.
Seller's concessions right here.
Bravo.
I don't know why it keeps doingthis.
You see that every time I clickAll right, seller's concessions
(10:32):
include, but are not limited toyou know this is military or
department of defense related.
When we're talking, it saysincluded but not limited to the
following that right there, thatannoys me Payment of the
buyer's VA funding fee.
So you can pay the VA fundingfee and like, for instance, this
(10:52):
I think this was almost $9,000.
If I knew what I knew now, Ididn't know this at the time.
I just knew concessions andthis is why, going into the VA
lender's handbook, you can justtype this in online VA lender's
handbook and you'll get it andyou can read through it and get
to know what they're talkingabout.
But if I knew what I knew now,I would have got that in there
(11:14):
too.
We're talking about prepaymentof buyer's property taxes and
insurance, so you can haveconcessions to the point that
you'd be like, hey, what I wantto do is I want to pay the
property taxes for next year andI want to pay the insurance for
the year as well Whateverinsurance you get and that'll be
part of the concessions.
They'll cut you a check Onceit's time.
(11:35):
Boom, you get that.
Gifts such as television sets ormicrowave ovens.
Now both of my homes are newbuilds.
I'm not flexing, but it is thesituation in which I found
myself.
So for some reason since COVID,apparently, builders have lost
the art or the connection togetting a refrigerator put in.
(11:58):
I don't know how they did it,but they did it.
They can give you a microwave,they can give you a dishwasher
and they can give you a stove,but for some reason they just
lost the connection.
So that could have been anexample of that had that
refrigerator in there.
Then we have the next thing ispayment of extra points,
(12:18):
provided permanent interest ratebuy downs, and that's a lot of
times what people do.
A good thing, a good rule ofthumb, is to make sure that it's
a permanent buy down.
Some buy downs are only a yearlong.
So you say you're at a 7.5%because we're going to talk
about the example in a second.
(12:39):
You're at a 7.5%.
You buy down only a percent.
Let's say, for instance so it'ssix and a half percent, but
it'll only be a year.
So now let's say you're paying$2,000 for mortgage for that
year and you didn't calculatebecause you didn't read it or
you forgot about it.
And now we're talking about itbumps up to $2,600 and you
(13:02):
didn't plan for that and you'relike oh my God, and this is how
a lot of people default.
So make sure that when you buydown, if you're going to buy
down, it's a permanent buy downand not a temporary buy down
Life hack.
Then the next one is provisionsof escrow funds to provide
temporary interest rate buydowns, and then we'll talk about
(13:23):
the last thing.
So provisions for of the escrowfunds is what kind of like?
Let's think of it as a kitty.
If you've never purchased ahouse, um, every month you're
going to pay the, the balanceand interest, the payment and
interest.
Then you're going to have anescrow included in there, let's
say $200.
And that's the forecasting ofhow much your property taxes are
(13:47):
going to be on that house.
And with new builds, per person, for instance and I only talk
about new builds because that'sall I know because I've only
purchased those.
It's hard to forecast aproperty tax on a property that
has never existed.
So it's a lot easier if you buyan in-place home, because they
already know that you can lookat previous years and get an
(14:12):
estimate of how much it can be.
So that's the difference,that's one of the benefits of
buying in-place homes.
And then the last thing, whichis what he is talking about
paying off credit card balancesor judgments on behalf of the
buyer.
So that just means everythinghe was talking about is asking
for a concession.
You got $10,000 worth ofaccrued debt.
(14:35):
They cut the check to eachindividual lender that you owe.
Now let's keep going.
Seller concessions do notinclude payment of the buyer's
closing calls, which I mentionedbefore, or payments of points
as appropriate to the market.
And we'll get into that Example.
(14:56):
If the market dictates aninterest rate of 7.5% with two
discount points, the seller'spayment of the two points would
not be a seller concession.
Now, if the seller paid fivepoints, three of these points
(15:16):
are going to be considered aseller's concession.
Now it says right here if themarket dictates an interest rate
of seven and a half with twopoints, with two discount points
.
So that means that you canpurchase up to two discounted
points in order to get it downto a different amount, right, so
?
And then it talks about whatthe problem is that builders
(15:36):
offer concessions as acompetitive tool and sometimes
the concessions may enticeunwary and unqualified veterans,
which is what I'm talking about.
What is that temporary buy-down?
And then you're going back up,right?
And then it says right there,because at the end of the day,
you're going to be buying a homethat you can't afford.
And if that temporary buy downgoes up to $2,600 and you only
(16:01):
budget it, or your allowance isonly $2,000 because you just
don't make no more money, thenyou would default and they can
qualify you with the buy down.
All they want to do is sell thehouse.
If you default on the house,they'll take it and they'll sell
it.
They're going to get theirmoney regardless.
Okay, so let's look at anexample.
(16:21):
We'll talk about this 4.0% in asec, these 4% limits in a
second, but what I want to do isI want to share my screen.
Here you go.
So we're going to be looking atthe cost of five points in this
(16:42):
example.
Okay, so you're going to gopurchase a house.
We're going to talk about thecost of five points, how much
interest rate might drop if youpurchase those five points.
Because we're going with theexample that's in the book
Monthly payment differences,just the principal and interest
P&I.
And then we're going to talkabout a break-even point if you
decide to buy those points.
(17:03):
Because if you're going tospend this money you got to be
able to at least break even soyou can say you got your monies
out of it versus in the negative.
But we'll talk about it.
So we're going to say one pointequals 1% of the loan amount.
So if we have a loan that's$300,000, what you're going to
(17:28):
see is that 1% of the 3,000, I'msorry, 5% of the 300,000 is
going to be 15,000, because 1%is $3,000.
So three times five is 15.
Okay.
So if you put in a calculatorand you say $300,000 multiplied
by 1%, it'll give you3,000.
So three times five is 15.
Okay.
So if you put in a calculatorand you say $300,000 multiplied
by 1%, it'll give you 3000.
Step two how much interest ratemight drop?
(17:51):
This is just a rough estimate.
I'm not a loan officer, I'mjust going off of quick maths.
Put it on a PowerPoint and plusor minus $100 or $200, okay, or
a point of 0.25% or so.
So the rough rule is one pointis going to take 0.25 off your
interest rate and, like I put inthere, varies by lender.
(18:12):
You're not going to hold meaccountable to this, okay, it
depends.
Now, five points times 0.25 is atotal of 1.25 off the rate,
right, a reduction.
So if you take 7.5% and youtake away 1.25, you're going to
be at 6.25%.
So if you bought down, if yougave them $15,000, you bought
(18:35):
down to 5%.
You would be from 7.5% down to6.25%.
Now, at the end of the day, yougo into the third step and you
can negotiate this.
Right, If you go into the thirdstep, which is the monthly
payment, it's going to be at7.5%.
You would be paying $2,098 amonth.
(18:59):
If you are at 6.25%, it wouldbe $1,847 per month and that's a
difference of $251.
Is it worth it?
Let's see you paid $15,000upfront, which is going to take
you, which is going to take you60 months or five years to break
(19:28):
even, to say I got my $15,000worth.
So if you stay in the house forfive years or longer, you're
going to be at a net positivenet savings.
If you sell or refinance beforethat, you will lose money.
That's it.
So, for instance, if you PCSand this is the deal that you
get, you get $300,000 house.
You want to buy five pointsdown, you want to give them
(19:52):
$15,000.
Down, you want to give them$15,000.
You cannot PCS if you got herenow, in 2025, until 2030, if you
want to break even, you cannotrefinance and you cannot sell.
If you do so, that $15,000upfront you're going to lose and
depending on when you sell,that's how much you're going to
lose.
Okay, that's number one.
Now let's go back into the VAlender's book.
(20:14):
Let's go back in there.
Where are we at?
We're going to read the 4%limit.
Any seller concession orcombination of concessions which
exceed 4% of the establishedreasonable value of the property
is considered excessive andunacceptable for VA loan.
For VA guaranteed loans Do notinclude normal discount points
(20:38):
and payments of the buyer'sclosing costs and total
concessions for determiningwhether concessions exceed the
4% limit.
So the closing costs, if it's$8,000, that does not go into
the factor, okay.
And the normal discount points,which are the 2%, don't worry
about it.
Now let's go back and look at anexample of that.
(20:59):
Let's look at an example of the4%.
So we're going to do this infour steps as well.
Step one we're going to figureout the 4% limit.
So the VA seller saysconcessions cannot be more than
4% of the home's value.
What's 4% of the home's value?
$300,000 times 4% and that'sgoing to give you $12,000.
(21:21):
That's the maximum concessionsallowed that you can do on that
house, because it's 4% of that.
Now step two is what countstowards the limit, the $12,000
limits.
We have to figure that outright.
It's the extra perks that arebeyond that normal cost.
So if paying more points thantypically given like seven
(21:43):
points, eight points, that's toomuch because it's going to put
you over Giving furniture,that's still part of it.
You got to take how much theamount is, and paying off debt.
You have a certain amount.
Up until what debt?
So we'll talk about what thecap is for this.
Well, $12,000 is the maximum.
So normal discount points it'swhat's standard in the market
(22:03):
and the closing and normalclosing costs do not count
towards the 4%.
So what was the example?
It was 7.5%, with a marketdictated of two points.
So those two points don't count, but we're going to keep going.
Number three we're going to beapplying the same scenario.
Normal market rate of twopoints equals $6,000.
(22:27):
Remember, 1% of $300,000 is$3,000.
I almost forgot.
Seller pays five total points.
The extra three points arecalled concessions.
Two points dictated by themarket, three points extra as we
talked about in the previousexample.
(22:48):
So extra three points is atotal amount of nine thousand
dollars.
Step four checking the rule,because that's the criteria.
We found what the criteria was,which was the $12,000.
And now we're talking about theconcessions.
The concessions counted are$9,000.
Those are the extra points.
Limit $12,000.
$9,000 is under the limit, soit's acceptable for the VA loan
(23:14):
and that's it.
These are things that we gottatake into account when we're
working with the VA loan,because many of us we just don't
know, like we literally justdon't know.
We live and we learn, we listenand we don't judge.
I was wondering why can't I seeanything?
I don't have my glasses on.
My glasses are right here.
(23:34):
This whole time I'm like whycan't I see anything?
I don't have my glasses on.
My glasses are right here.
This whole time I'm like whycan't I see anything?
It's because I don't even havemy glasses on.
What a weirdo, all right, cool.
So, yeah, watch this video acouple of times.
Go on his page he is giving he'sgiving some good information.
You just have to understandthat the VA loan it's not just
like a regular loan.
Like I told you earlier, it's ahack, it's a benefit, whatever
(23:56):
you want to call it, but it canbe used for more than one
benefit.
Well, for more than one benefit, right?
Because you're going to buy thehouse and you're going to
qualify for the house.
You're going to not have togive a down payment and then you
could potentially get paid forthat by what Seller's
concessions.
So do me a favor share this withyour team leaders, your squad
(24:17):
leaders, anybody that you knowthat's eligible for VA loan.
Also, drop a comment if youfound this information helpful.
This is where that's.
That's my whole goal.
That's my calling to help everyjunior troop out there, even
seniors.
But my goal is you guys, thejunior troops, like, subscribe
(24:37):
and follow for more Army contentand remember you don't have to
embrace the suck if you got theright tools in your ruck.
I'm Sergeant Cruz and I'll seeyou in the next one, peace.
Let me get this thought through.
This works a couple ways.
You have the optimal scenario,which is you go to purchase a
house and you qualify, it goesthrough underwriting, it comes
back, you're good to go and youjust ask for a concession.
Then you have the scenario ofyou go through underwriting and
(00:22):
they kick it back because yourdebt to income ratio isn't good,
and that's the scenario thatyou don't want.
However, with seller'sconcession or concession list,
this is how you can use this toget into the home that you
particularly want to get into.
Welcome to the Roger SarntPodcast, where we talk all
(00:43):
things Army and I'm your host,sarnt Cruz.
And today we are going to bereacting to a video that I found
on TikTok, and this isspecifically in reference to the
VA loan, and this individualtalks about how the VA loan can
be used for paying off debt,personal debt and the reason why
(01:08):
I want to react to this videois because a long time ago, I
purchased this house that I'm in.
Well, almost two years ago Ipurchased this house and I did
the same thing he's talkingabout, so I know firsthand that
this works.
So he's specifically, he'sgoing to be a realtor, he's
(01:29):
getting out the military andhe's putting people up on game.
So when I purchased this housein particular, I had made a
significant purchase, maybe afew months earlier.
Now I knew what I was doingbecause I had heard about this
and, as I'm making payments onthis significant amount, I asked
for the concession and when Iasked her about it she was like
(01:52):
the worst they can say is no.
So she asked, they gave it tome.
I pretty much got a free itemand it's, it works.
So this, this is it.
Here he is.
He's on TikTok.
Let me share my screen there.
Yeah, so you guys can see whoI'm talking about and he gives
some good game.
Let me see where it is.
(02:14):
His name is KhalifaTheRealtor27.
Khalifatherealtor27.
And the initial thing that yousee on the screen is use the VA
loan to pay off personal debtand let's just let it roll.
Speaker 2 (02:34):
So I told you all this last week, but it looks
like I didn't hear it, so I'mjust going to say it again.
You can use the VA loan to payoff personal debt.
I'm going to say that again youcan use the VA loan to pay off
personal debt.
How it works, listen real close.
When you're buying a house, wecan negotiate something called
seller concessions and I'msaying we, because I'm getting
out and I'm a realtor now, butanyway, we can negotiate
(02:56):
something called sellerconcession and that's basically
money that the seller isbasically giving back to you to
help you with, like your closingcosts and some stuff like that.
You know, now the hack is wecan negotiate as much as
possible for those sellerconcessions.
Now the real hack is you canuse up to four.
Speaker 1 (03:13):
Now what I want to do here is he's talking about
seller concessions.
Now, when you are purchase acar, purchase a house, you,
anytime you purchase somethingor you get into a realm in which
you're not familiar with,there's going to be certain
lingo, jargon, words that youmay not understand, and because
(03:34):
of that, I am going to go intothe VA lender's handbook and I
will walk you through exactlywhat he's talking about, because
it's in there, right?
So we're going to have ascenario.
We're going to talk about thepages, because there's two pages
in which cover what he'stalking about.
We're going to give you ascenario on what the VA loan
(03:57):
itself is in four steps on theseller concession and the other
percentage that he's going totalk about in a second 4%, 4% of
those seller concessionstowards whatever you want
personal debt, car payment, adown payment for whatever else,
(04:18):
it don't matter.
Speaker 2 (04:19):
Up to 4% you can use for anything.
Just imagine that for a secondYou're buying a house and you're
still getting money from theseller to actually pay off your
credit cards.
Let's say, Can you imagine andit's one of the reasons why I-
love it.
Speaker 1 (04:34):
He says can you imagine and it's true, right
yeah, think about it.
If you're in a bind I'm in abind, nate If you're in a bind
and you have a certain amount ofdebt, because this works a
couple of ways.
Let me get this thought through.
This works a couple of ways.
You have the optimal scenario,which is you go to purchase a
(04:58):
house and you qualify, it goesthrough underwriting, it comes
back, you're good to go and youjust ask for a concession.
Then you have the scenario ofyou go through underwriting and
they kick it back because yourdebt to income ratio isn't good,
and that's the scenario thatyou don't want.
(05:18):
However, with seller'sconcession or concessions, this
is how you can use this to getinto the home that you
particularly want to get into,and that's the beauty of this
perk.
We can call it a hack strategyperk, whatever you want to call
it, but that's the advantage ofit.
(05:38):
If you qualify, you can ask formore money and pay off debt.
If you don't qualify, you canask for more money and pay off
debt.
If you don't qualify, you canask for more money and pay off
the debt that's holding you back, and then, hopefully, that's
enough and you qualify.
So that's the biggest deal.
And, just like he said, it'sfree money.
But yeah, they're paying you toget into a house, that's it.
Speaker 2 (06:01):
Y'all got to use your VA loan.
It's a beast, it's a cheat code.
This is the most powerful loanand the only loan that's going
to allow you to do somethinglike this.
Nobody else can do this.
He's right.
Speaker 1 (06:13):
You can get into FHA loan.
You're going to give three,three and a half percent.
You can get into a conventionalloan.
The more than likely thing thatyou're going to have to do is
pay 20% in order to not pay PMI,which is mortgage insurance.
It's the bank's way of insuringtheir loan.
(06:36):
So if you don't give 20%,you're going to pay PMI.
If you do give 20%, if I'm not300,000, 20% is probably like
60,000.
And let me know how many of usare just hanging out with 60,000
to put down on a house, on a$300,000 house?
This house is 299.
(06:56):
I put nothing down on it.
Yes, you put the 20% down, yourmortgage payment will be lower.
That is correct.
But there are ways or scenariosin which, if the mortgage
payment is lower because of themoney you put down, you have to
live at a certain amount ofmoney or time in order to get
that money back.
But I digress, let's go back towhat he's talking about.
Speaker 2 (07:19):
You're not just buying a home, You're getting
paid to buy a home.
I hope if I say it like that itwill make sense.
I hope so.
It does not get better thanthat, Can it no?
And right now we are in abuyer's market, which means we
can negotiate as much aspossible.
Right now is your best time asa buyer especially if you're in
the military to buy a house,because we can negotiate as much
(07:41):
as possible off those sellerconcessions.
Speaker 1 (07:44):
Now he's right.
I mean the percentage.
The interest rate is what keepspeople from buying right
Because it's so high.
Even if you do an assumableloan, you're going to assume the
amount of that mortgage at acheap rate, but you still have
to find another loan or come upwith the equity or the rest of
(08:09):
the amount.
So let's say, for instance, ahouse costs $200,000.
The person paid down up to 180,but the assumable would be 180,
but they're selling it for 250.
Now you got to come out of yourpocket $70,000 or get a second
mortgage or loan, whatever it isRight.
So it can be a buyer's market,depending on how you do it, even
(08:33):
with high interest rates.
Even with high interest rates.
Speaker 2 (08:37):
And if you didn't know, now you know, now you know
.
Speaker 1 (08:42):
I love it.
And if you didn't know, now youknow, all right.
So let's, let's go into the VAlenders handbook.
Let's get in there real fast.
Yeah, we're, we're in there.
And this is talking aboutborrower fees and charges and
(09:02):
charges for the veteran borrowerand charges for the veteran
borrower, right?
So the policy is the seller,lender or any other party may
pay fees and charges, includingdiscount points, which we'll
talk about.
What points are on behalf ofthe borrower?
Va regulation limits chargesmade against or paid by the
borrower.
They do not limit the fees ofthe payment of fees and charges
(09:25):
by other parties, right, and alot of times they'll tell you
and I'm not going to get intothis, but a lot of times people
put down on a VA loan and youreally don't have to.
The only exceptions areexcessive seller concessions are
prohibited.
Like, if you're trying to OD onthe concessions, it's just not
going to work out, right, we'regoing to go into the next
chapter, chapter five.
(09:47):
Let's go here we go Seller'sconcession.
So what's the definition of theseller for the seller's
concessions?
For the purpose of this topic,a seller concession is anything
of value added to thetransaction by the builder or
seller for which the buyer paysnothing additional and which the
seller is not customarilyexpected or required to pay or
(10:11):
provide.
An example of that can be theclosing costs.
Right, you're expected to pay aclosing cost, it is what it is.
So, whatever that percentage is, you pay it and then you move
forward.
Seller's concessions right here.
Bravo.
I don't know why it keeps doingthis.
You see that every time I clickAll right, seller's concessions
(10:32):
include, but are not limited toyou know this is military or
department of defense related.
When we're talking, it saysincluded but not limited to the
following that right there, thatannoys me Payment of the
buyer's VA funding fee.
So you can pay the VA fundingfee and like, for instance, this
(10:52):
I think this was almost $9,000.
If I knew what I knew now, Ididn't know this at the time.
I just knew concessions andthis is why, going into the VA
lender's handbook, you can justtype this in online VA lender's
handbook and you'll get it andyou can read through it and get
to know what they're talkingabout.
But if I knew what I knew now,I would have got that in there
(11:14):
too.
We're talking about prepaymentof buyer's property taxes and
insurance, so you can haveconcessions to the point that
you'd be like, hey, what I wantto do is I want to pay the
property taxes for next year andI want to pay the insurance for
the year as well Whateverinsurance you get and that'll be
part of the concessions.
They'll cut you a check Onceit's time.
(11:35):
Boom, you get that.
Gifts such as television sets ormicrowave ovens.
Now both of my homes are newbuilds.
I'm not flexing, but it is thesituation in which I found
myself.
So for some reason since COVID,apparently, builders have lost
the art or the connection togetting a refrigerator put in.
(11:58):
I don't know how they did it,but they did it.
They can give you a microwave,they can give you a dishwasher
and they can give you a stove,but for some reason they just
lost the connection.
So that could have been anexample of that had that
refrigerator in there.
Then we have the next thing ispayment of extra points,
(12:18):
provided permanent interest ratebuy downs, and that's a lot of
times what people do.
A good thing, a good rule ofthumb, is to make sure that it's
a permanent buy down.
Some buy downs are only a yearlong.
So you say you're at a 7.5%because we're going to talk
about the example in a second.
(12:39):
You're at a 7.5%.
You buy down only a percent.
Let's say, for instance so it'ssix and a half percent, but
it'll only be a year.
So now let's say you're paying$2,000 for mortgage for that
year and you didn't calculatebecause you didn't read it or
you forgot about it.
And now we're talking about itbumps up to $2,600 and you
(13:02):
didn't plan for that and you'relike oh my God, and this is how
a lot of people default.
So make sure that when you buydown, if you're going to buy
down, it's a permanent buy downand not a temporary buy down
Life hack.
Then the next one is provisionsof escrow funds to provide
temporary interest rate buydowns, and then we'll talk about
(13:23):
the last thing.
So provisions for of the escrowfunds is what kind of like?
Let's think of it as a kitty.
If you've never purchased ahouse, um, every month you're
going to pay the, the balanceand interest, the payment and
interest.
Then you're going to have anescrow included in there, let's
say $200.
And that's the forecasting ofhow much your property taxes are
(13:47):
going to be on that house.
And with new builds, per person, for instance and I only talk
about new builds because that'sall I know because I've only
purchased those.
It's hard to forecast aproperty tax on a property that
has never existed.
So it's a lot easier if you buyan in-place home, because they
already know that you can lookat previous years and get an
(14:12):
estimate of how much it can be.
So that's the difference,that's one of the benefits of
buying in-place homes.
And then the last thing, whichis what he is talking about
paying off credit card balancesor judgments on behalf of the
buyer.
So that just means everythinghe was talking about is asking
for a concession.
You got $10,000 worth ofaccrued debt.
(14:35):
They cut the check to eachindividual lender that you owe.
Now let's keep going.
Seller concessions do notinclude payment of the buyer's
closing calls, which I mentionedbefore, or payments of points
as appropriate to the market.
And we'll get into that Example.
(14:56):
If the market dictates aninterest rate of 7.5% with two
discount points, the seller'spayment of the two points would
not be a seller concession.
Now, if the seller paid fivepoints, three of these points
(15:16):
are going to be considered aseller's concession.
Now it says right here if themarket dictates an interest rate
of seven and a half with twopoints, with two discount points
.
So that means that you canpurchase up to two discounted
points in order to get it downto a different amount, right, so
?
And then it talks about whatthe problem is that builders
(15:36):
offer concessions as acompetitive tool and sometimes
the concessions may enticeunwary and unqualified veterans,
which is what I'm talking about.
What is that temporary buy-down?
And then you're going back up,right?
And then it says right there,because at the end of the day,
you're going to be buying a homethat you can't afford.
And if that temporary buy downgoes up to $2,600 and you only
(16:01):
budget it, or your allowance isonly $2,000 because you just
don't make no more money, thenyou would default and they can
qualify you with the buy down.
All they want to do is sell thehouse.
If you default on the house,they'll take it and they'll sell
it.
They're going to get theirmoney regardless.
Okay, so let's look at anexample.
(16:21):
We'll talk about this 4.0% in asec, these 4% limits in a
second, but what I want to do isI want to share my screen.
Here you go.
So we're going to be looking atthe cost of five points in this
(16:42):
example.
Okay, so you're going to gopurchase a house.
We're going to talk about thecost of five points, how much
interest rate might drop if youpurchase those five points.
Because we're going with theexample that's in the book
Monthly payment differences,just the principal and interest
P&I.
And then we're going to talkabout a break-even point if you
decide to buy those points.
(17:03):
Because if you're going tospend this money you got to be
able to at least break even soyou can say you got your monies
out of it versus in the negative.
But we'll talk about it.
So we're going to say one pointequals 1% of the loan amount.
So if we have a loan that's$300,000, what you're going to
(17:28):
see is that 1% of the 3,000, I'msorry, 5% of the 300,000 is
going to be 15,000, because 1%is $3,000.
So three times five is 15.
Okay.
So if you put in a calculatorand you say $300,000 multiplied
by 1%, it'll give you3,000.
So three times five is 15.
Okay.
So if you put in a calculatorand you say $300,000 multiplied
by 1%, it'll give you 3000.
Step two how much interest ratemight drop?
(17:51):
This is just a rough estimate.
I'm not a loan officer, I'mjust going off of quick maths.
Put it on a PowerPoint and plusor minus $100 or $200, okay, or
a point of 0.25% or so.
So the rough rule is one pointis going to take 0.25 off your
interest rate and, like I put inthere, varies by lender.
(18:12):
You're not going to hold meaccountable to this, okay, it
depends.
Now, five points times 0.25 is atotal of 1.25 off the rate,
right, a reduction.
So if you take 7.5% and youtake away 1.25, you're going to
be at 6.25%.
So if you bought down, if yougave them $15,000, you bought
(18:35):
down to 5%.
You would be from 7.5% down to6.25%.
Now, at the end of the day, yougo into the third step and you
can negotiate this.
Right, If you go into the thirdstep, which is the monthly
payment, it's going to be at7.5%.
You would be paying $2,098 amonth.
(18:59):
If you are at 6.25%, it wouldbe $1,847 per month and that's a
difference of $251.
Is it worth it?
Let's see you paid $15,000upfront, which is going to take
you, which is going to take you60 months or five years to break
(19:28):
even, to say I got my $15,000worth.
So if you stay in the house forfive years or longer, you're
going to be at a net positivenet savings.
If you sell or refinance beforethat, you will lose money.
That's it.
So, for instance, if you PCSand this is the deal that you
get, you get $300,000 house.
You want to buy five pointsdown, you want to give them
(19:52):
$15,000.
Down, you want to give them$15,000.
You cannot PCS if you got herenow, in 2025, until 2030, if you
want to break even, you cannotrefinance and you cannot sell.
If you do so, that $15,000upfront you're going to lose and
depending on when you sell,that's how much you're going to
lose.
Okay, that's number one.
Now let's go back into the VAlender's book.
(20:14):
Let's go back in there.
Where are we at?
We're going to read the 4%limit.
Any seller concession orcombination of concessions which
exceed 4% of the establishedreasonable value of the property
is considered excessive andunacceptable for VA loan.
For VA guaranteed loans Do notinclude normal discount points
(20:38):
and payments of the buyer'sclosing costs and total
concessions for determiningwhether concessions exceed the
4% limit.
So the closing costs, if it's$8,000, that does not go into
the factor, okay.
And the normal discount points,which are the 2%, don't worry
about it.
Now let's go back and look at anexample of that.
(20:59):
Let's look at an example of the4%.
So we're going to do this infour steps as well.
Step one we're going to figureout the 4% limit.
So the VA seller saysconcessions cannot be more than
4% of the home's value.
What's 4% of the home's value?
$300,000 times 4% and that'sgoing to give you $12,000.
(21:21):
That's the maximum concessionsallowed that you can do on that
house, because it's 4% of that.
Now step two is what countstowards the limit, the $12,000
limits.
We have to figure that outright.
It's the extra perks that arebeyond that normal cost.
So if paying more points thantypically given like seven
(21:43):
points, eight points, that's toomuch because it's going to put
you over Giving furniture,that's still part of it.
You got to take how much theamount is, and paying off debt.
You have a certain amount.
Up until what debt?
So we'll talk about what thecap is for this.
Well, $12,000 is the maximum.
So normal discount points it'swhat's standard in the market
(22:03):
and the closing and normalclosing costs do not count
towards the 4%.
So what was the example?
It was 7.5%, with a marketdictated of two points.
So those two points don't count, but we're going to keep going.
Number three we're going to beapplying the same scenario.
Normal market rate of twopoints equals $6,000.
(22:27):
Remember, 1% of $300,000 is$3,000.
I almost forgot.
Seller pays five total points.
The extra three points arecalled concessions.
Two points dictated by themarket, three points extra as we
talked about in the previousexample.
(22:48):
So extra three points is atotal amount of nine thousand
dollars.
Step four checking the rule,because that's the criteria.
We found what the criteria was,which was the $12,000.
And now we're talking about theconcessions.
The concessions counted are$9,000.
Those are the extra points.
Limit $12,000.
$9,000 is under the limit, soit's acceptable for the VA loan
(23:14):
and that's it.
These are things that we gottatake into account when we're
working with the VA loan,because many of us we just don't
know, like we literally justdon't know.
We live and we learn, we listenand we don't judge.
I was wondering why can't I seeanything?
I don't have my glasses on.
My glasses are right here.
(23:34):
This whole time I'm like whycan't I see anything?
I don't have my glasses on.
My glasses are right here.
This whole time I'm like whycan't I see anything?
It's because I don't even havemy glasses on.
What a weirdo, all right, cool.
So, yeah, watch this video acouple of times.
Go on his page he is giving he'sgiving some good information.
You just have to understandthat the VA loan it's not just
like a regular loan.
Like I told you earlier, it's ahack, it's a benefit, whatever
(23:56):
you want to call it, but it canbe used for more than one
benefit.
Well, for more than one benefit, right?
Because you're going to buy thehouse and you're going to
qualify for the house.
You're going to not have togive a down payment and then you
could potentially get paid forthat by what Seller's
concessions.
So do me a favor share this withyour team leaders, your squad
(24:17):
leaders, anybody that you knowthat's eligible for VA loan.
Also, drop a comment if youfound this information helpful.
This is where that's.
That's my whole goal.
That's my calling to help everyjunior troop out there, even
seniors.
But my goal is you guys, thejunior troops, like, subscribe
(24:37):
and follow for more Army contentand remember you don't have to
embrace the suck if you got theright tools in your ruck.
I'm Sergeant Cruz and I'll seeyou in the next one, peace.
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