Purchasing and selling a home has significant financial implications almost always. Homeownership may seem unthinkable for active-duty military families unless retirement is on the horizon and you’re ready to settle down. If you want to own a home, here are some pointers to help you make wise decisions, even if you’re in the military.
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Consider a VA Lender
Veterans should consider a VA lender because VA loans don’t require a down payment and generally have low-interest rates. The Department of Veteran’s Affairs insures these loans, but private lenders give them out. According to Birk, the VA also requires lenders to take a more holistic approach to underwrite these loans than they would for conventional loans. In addition to credit scores and debt-to-income ratios. This means the lender will require you to have a certain amount in your bank account at the end of each month. However, the amount varies by area, so make sure you can afford the loan.
Even if you don’t have perfect credit or exceed the recommended debt-to-income ratios, a steady residual income can help you qualify. Before you apply, double-check your eligibility, the VA lending limits, and other requirements. One of the VA home loan requirements is that the home must be your primary residence, and you must move in within 60 days of closing, with some exceptions made for deployments. You should, however, consider other options such as conventional and FHA loans. Non-VA lenders can sometimes offer better rates, and not all properties meet the loan program requirements.
Choose an Experienced Realtor
If you decide that purchasing a home is in your best interests, consider finding a realtor. Your real estate agent will play an essential role in assisting you in locating and negotiating the purchase of the home that best meets your requirements. You should pick one with care, ensuring that your agent is familiar with military life and the unique needs you face as a service member.
If you plan to purchase a home with a VA loan, you must work with an agent familiar with the program. The VA home loan has specific requirements for the home inspections that must be completed and the home’s overall condition. Hiring an agent who is familiar with the PCS process and the VA loan application and VA home requirements can be beneficial, especially if you are deployed and unable to visit homes yourself.
Request a Virtual Tour of the Property
Because you won’t be able to take an in-person tour from abroad or across multiple states, you’ll have to rely on your real estate agent to provide you with as much information as possible. To do a complete walkthrough of the home with you, most agents will do video tours using FaceTime. Most real estate companies offer virtual tours that are as close to “face-to-face” as possible without the buyers being in the home.
Current real estate firms make it a habit to create a video tour of the neighborhood, as well as schools and other points of interest, to give buyers a complete picture of what they’re buying. This is because you might come across a home that has been tastefully renovated but isn’t in the best of areas.
Keep Your Budget in Check
Lenders will examine your debt-to-income ratio. That is the difference between the money coming in and the money going out in debt payments.
Before you start looking for a loan, here’s how to figure out your debt-to-income ratio: Do the math on all of your recurring debt payments, including your mortgage principal, property taxes, and insurance, as well as other recurring debt like credit cards, student loans, and car payments. A 36 percent or lower ratio is ideal. You want to avoid getting into debt as much as possible. Keep in mind that just because your lender says you qualify for a specific loan amount does not mean you can afford it.
Buy a home you can comfortably afford on one income if everything else is on track. This allows a couple to have some financial flexibility if one partner loses their job or stays at home with their children full-time.
For any family, purchasing a home is a complicated and well-thought-out process. Use your connections and speak with other military families you know who have purchased a home while on active duty to learn what they did well and what they would change. Though there is no one-size-fits-all solution, buying a home can provide independence, pride, and stability that you might not expect while on active duty.
