SDowner, be happy you qualified for conventional financing. Borrowers using $0 down VA financing are already upside down upon COE. This is due to the humungous “funding fee” of 2.15% that is wrapped into the VA purchase-money or refinance loan. Due to this (and the slow payoff in the first years of their 102.15% LTV mortgage), they still owe 100% of their mortgage ~3 years later when it is time for a change of duty station. A lot of these borrowers let their VA-funded property go into foreclosure when they change duty stations or retire in a different locale because they can’t get enough proceeds from a sale to pay all their closing costs and retire their mortgage and the spouse is unwilling or unable to stay behind to attempt to ready the property for sale and put it on the market while the sponsor/member reports to his/her new duty station. After these borrowers default and then transfer to a new locale, they just live in military housing (if available) until such time as they have another change of station or they are able to buy again. If they can’t get their VA loan entitlement returned to them (due to foreclosure and the VA paying off the 25% “guarantee” to the lender) then they will have to try to later qualify for financing which requires a downpayment.
Most military families (and even retirees) especially from the enlisted ranks, live check to check all of their lives. If the sponsor dies before his/her spouse and has elected to have a survivor benefit premium taken from his/her pay at the time of retirement, his/her spouse will receive a benefit of 55% of his retirement pay (which could be substantial, esp in combination with SS benefits).
This group really doesn’t care if they have to live check to check the rest of their lives or their credit is (temporarily) shot because the vast majority of them will have some kind of a check coming in (plus SS, when they become eligible) until they die. In addition, if they are retirees, they (and their spouses) are eligible for Tricare and Tricare for Life plus have commissary and exchange privileges for life and a myriad of other recreational, travel and social services available to them at low or no cost through their local base.
Essentially, just think of most of these recent VA buyers as “glorified renters” who will likely never build up any equity before they find themselves having to sell due to a life circumstance. They live in a transient culture where “big brother” has always taken care of their daily needs.
These poor schmucks (your neighbors?) aren’t really “better off” than you. When push comes to shove and you are all applying for SS, I predict your net worth will be 10X theirs. It is also quite possible that some or all of them will have no net worth at all by then and that is okay. They’ll just live off their pensions in a double or even single-wide mobile home in flyover America and the house they once “owned” for a minute and a half in your neighborhood will be but a fleeting memory 😀
