6 Reasons Military Members Should Consider Buying vs. Renting

As plans come together for a permanent change of station (PCS), military members are faced with making housing decisions. There is no one-size-fits-all answer to this question as everyone's circumstances are different, but there are definite situations when it makes the most financial sense to buy instead of rent. Keep reading to learn why it's sometimes better for active-duty military members to buy a house instead of renting one.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

Renters Are Already Paying a Mortgage; It Just Isn't Theirs

Military individuals or families who rent homes are already essentially paying a mortgage—they're paying off their landlord's mortgage. This is money that can be shifted to one's own mortgage to build equity in a property, along with enjoying the tax benefits that come with homeownership. Also, depending on the local real estate market, it might be more affordable to own than rent.

While there is risk in any real estate investment, military members are positioned well because they are protected under the Servicemembers Civil Relief Act (SCRA). This act allows the active-duty military to limit the interest rates for mortgages to six percent. Furthermore, they are protected from foreclosure if they can't maintain their mortgages due to their military responsibilities.

Homeowners Can Take Charge of Their Own Home

Dealing with landlords can be difficult in general. However, for the active-duty military, there are additional challenges. Along with the routine issues, they must worry about their home and the family members they leave behind during deployments. If something breaks, their family members must wait for a potentially unresponsive landlord or property manager.

Although there are design strategies for short-term housing, it's hard to truly customize on-base housing or a rental. For some people, this makes it challenging to feel like they belong anywhere, especially since they move so frequently. Being able to mold a home into one's own is essential to some people.

Homeownership Increases Consistency

Suppose an affordable home is in a location where the service member is likely to be reassigned because it's in or near a city with several military installations, such as Washington D.C. or San Antonio. In that case, it might make sense to buy. Other factors to consider include the length of PCS orders. If the military member has fallen in love with a city, they may decide to settle down when they separate from service or retire eventually.

Homeowners Can Rent Out for Supplemental Income

Ultimately, career service members will have to move at some point. Many find it makes better sense financially to be the landlord. They live in their homes for the time they're at their duty station. Then they become landlords, often renting to other service members moving into town, which offers a tremendous passive source of income.

Military Homeowners Enjoy the Benefits of a VA Loan

One substantial benefit offered to the military is the VA Loan. This loan, administered by the Veterans Administration, makes the dream of homeownership a reality for many people. These loans offer lower stringent financial benchmarks, no down payment, no private mortgage insurance (PMI), and typically lower interest rates. Additional benefits are provided to service members who meet disability requirements. As another bonus, active-duty military members can use BAH toward their mortgages, which might cover most, if not all, monthly housing expenses.

Homeowners Can Avoid Hassles of On-Base Housing

Living on-base offers benefits. However, even living in designated military housing, the BAH may not fully cover costs, primarily if assigned to an area where homes outside the military base are more affordable. Additionally, since military housing is outsourced to third parties, renters in these homes often experience problems with housing quality. Other issues associated with on-base housing include little privacy, strict requirements for the rental, and small spaces. Areas with high military populations also have housing shortages which push military members into the private rental market due to long waiting lists.

Active-Duty Military Members Should Consider Homeownership

Military members often find buying a home to be a smart financial move. Factors such as the strength of the local economy, interest rate levels, household income, and risk tolerance should all be considered. Once the right boxes are ticked off, homeownership for many turns out to be the right choice, especially if they can buy low and sell high due to economic ebbs and flows.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.