To Buy or Not to Buy... That is the Question in Military Homeownership
Posted: April 7, 2010
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The challenges of military life, including frequent PCS orders, can make military homeownership seem like a hassle for some military servicemembers. Many military personnel who are re-stationed around the globe frequently - sometimes with minimal notice- find renting or even living on base the most convenient move.
For others, leveraging a
VA Home Loan and its many advantages such as no down payment and lower interest rates, all serve to make military families into successful homeowners.
Some military personnel take advantage of the financial incentives of buying a home while they are still on active-duty. For example, military homeowners are eligible to deduct all mortgage interest on their taxes each year, even if those mortgage payments are made with
tax-free military pay.
Homeownership should be well a thought out military plan for service members and their families. Which housing choice is best for you and your military family?
DO MORE MILITARY FAMILIES BUY OR RENT?
This question doesn’t have a one-size-fits-all-answer. Each military family must assess their own housing needs. Once you decide to buy or rent your next military home, there are many military programs to support you in your decision and make for a successful move to your new home, now and for the future.
Your
Basic Housing Allowance, for example, supports you in housing to buy or rent, covering all or part of your rent or mortgage payments.
Your VA mortgage benefits, as another example, give you access to the lowest interest rates, and home purchase with no down payment or private mortgage insurance costs.
CAN YOU AFFORD TO OWN YOUR OWN HOME?
Affordable housing is defined as costing 30% or less of your take-home military pay every month. Following this guideline will keep your from struggling with mortgage payments and creating a cycle of overwhelming debt.
Some military are advised to rent for the first few months after being re-located to a new area. The idea is to give your military family time to get acclimated to a new environment, choose the most suitable neighborhood to settle into, realize the volatility of the housing market, and determine if 3-5 years in your new home - the standard amount of time for your homeownership investment to pay off - will be manageable.
VA HOME LOANS SUPPORT MILITARY HOMEOWNERSHIP
Active duty military, veterans, Reservists and National Guard members are all potentially eligible for the unmatched benefits of today’s VA loans, with up to $417,000 in mortgage loans and no down payment or private mortgage insurance required. VA home loans are offered through private lenders, and although interest rates vary, they are generally lower than market-priced private lenders.
MILITARY HOMEOWNERSHIP TODAY AND TOMORROW
When considering the merits of military homeownership, it is important to look down the road and see how today’s military homeownership decision factors into your post-military future.
If you will be leaving the military soon, basic housing allowances and certain loans will no longer support the many extended costs of ownership including mortgage, homeowners insurance, property taxes, and maintenance. Before you buy, build up your financial safety net so that it can surround and protect your investment in your home; expand your emergency fund to include a few months worth of homeownership expenses in case of job loss and in order to allow you to safely ride out the dips of a fluctuating housing market.
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