5 Things First-Time Military Home Buyers Should Know

Many people have the luxury of time when buying a house, but active-duty military members sometimes have to make a quick decision. Whether having recently joined the military, having years of service, or getting ready to retire, purchasing a home can be a great investment, but it can also create some challenges when getting deployed at a moment's notice or a permanent change of situation arises. Considering investing in a home at a new duty station? Or perhaps separating from service and looking to settle down? Keep reading to find five things first-time military home buyers should know.

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

The Pros and Cons of Renting vs. Owning as a Military Member

Depending on where a service member is stationed, on-base housing may be limited or have waiting lists. If it boils down to renting or buying a home, time may be of the essence. In some cases, buying makes more financial sense than renting, especially if rent costs are high due to limited supply. Some perks of buying a home include:

• Eligibility for VA loans
• BAH allotments can be applied to mortgage payments
• Making mortgage payments builds equity
• When it's time to move, a home can be rented out to establish a passive income stream

Deciding to commit to such a large purchase and choosing the right mortgage can be daunting. But if it makes financial sense, a home purchase could turn out to be a great investment over a temporary rental.

The Perks Included with Veteran Assistance Loans

Military members and veterans are eligible for VA Loans, which offer terrific benefits over other types of mortgages. For instance, qualifying for VA loans means they can buy a home with a no down payment option, no requirement for mortgage insurance, lower interest rates, flexible credit standards, and limits on closing costs. Conventional mortgages require a 20% down payment to avoid mortgage insurance, look for strong credit, and, depending on credit standing, may offer less favorable terms when contrasted with VA loans. All first-time military homebuyers should research the VA loan process.

How to Get Pre-Approved Financing as a Military Member

Once the decision has been made to buy a home, it's essential to get pre-approved. Home seekers that are pre-approved can move quickly once they find the right property. This is particularly important in a seller's market because it shows sellers the offer is serious, and a pre-approval letter gives an edge against competition from other buyers. As a military member, time and options may be limited if a quick purchase needs to be made. Getting pre-approved can significantly expedite the process.

The Potential Growth of Investment Opportunities

Service members or veterans who use a VA Loan to buy a home must live in the house due to the owner-occupancy rule associated with the mortgage. The good news is once the home has been lived in, owners who are unexpectedly deployed or due to PCS can vacate the home without any penalties. At this point, they can either sell the home if it makes financial sense or rent out an old home for passive income. If certain criteria are met, a second VA loan may be possible at the next duty station.

Where to Find a VA-Savvy Real Estate Agent

All buyers typically find there are many benefits to working with a knowledgeable real estate agent. When selecting who to work with, strive to consult with a real estate agent who has experience working with the military population. Working with someone who understands the challenges service members and veterans face can make a huge difference in the buying experience. The VA has certain home criteria that must be met, and no one wants to run into the problem of making an offer on a house that isn't VA-approved.

The Road to Homeownership for Military Members

After living in many different places, the idea of investing in property in a single area might seem daunting, but in many cases, it can be a great financial decision. Ideally, most people like to take their time buying property, but military members don't always have that luxury. However, understanding the home buying process, VA benefits, and weighing out all options can help make the process much easier.

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