Whether you’re newly enlisted or have years of service under your belt, owning a home can be a great investment. But it also can cause financial stress and difficulty if you have to move at a moment’s notice. Keep your budget in mind when shopping for a property and a home loan.
To get started, keep reading. Also check out CFPB information to help navigate the home-buying and mortgage process, and VA information on loans: you may be eligible for the VA Home Loans program. The Department of Veterans Affairs guarantees part of these loans, which lets a private lender give you a better deal.
These are guidelines — the details of your situation might differ and affect your choices.
Owning may appear to cost less than renting, but weigh the pros and cons of each.
With renting, you:
- can apply your Base Allowance for Housing (BAH) to rent
- aren’t on the hook for major maintenance issues
- pay lower up-front costs
- might have lower monthly payments
- might be able to move more easily at a moment’s notice. If you own your home, a PCS could leave your house vacant and on the market for months or years, while you keep making payments. Renting out your home is an option, but being a landlord while in the military can be time consuming, costly, and challenging.
With home buying, you:
- can apply your BAH to mortgage payments
- are responsible for maintenance
- have to make your mortgage payment, unless you can sell
- can personalize your home as you like
- may get tax advantages
- are responsible for taxes and insurance — and possibly mortgage insurance, depending on the size of your downpayment. These costs are usually included in your mortgage payments, but check to be sure.
Military OneSource has several financial planning calculators that can help you assess your decision, including which types of mortgages may fit your situation.
The Servicemembers Civil Relief Act (SCRA) offers some protections. If you bought a home before beginning active duty, you can get your mortgage interest rate lowered to 6 percent, if you request. All excess interest payments under a higher interest rate will be forgiven.
Having trouble keeping up your payments? See your PFM for guidance and options. Scammers may offer to help you avoid foreclosure, but they’ll make your situation worse. Never pay any company up front if they promise to lower your payments or stop foreclosure.
