{"id":30389,"date":"2022-03-28T12:03:12","date_gmt":"2022-03-28T19:03:12","guid":{"rendered":"https:\/\/www.homelight.com\/blog\/?p=30389"},"modified":"2022-03-28T12:03:12","modified_gmt":"2022-03-28T19:03:12","slug":"buyer-buying-a-house-in-the-military","status":"publish","type":"post","link":"https:\/\/www.homelight.com\/blog\/buyer-buying-a-house-in-the-military\/","title":{"rendered":"Your Guide to Buying a House While You\u2019re In the Military (And Is It a Good Idea?)"},"content":{"rendered":"

After enlisting in the military, you might hear some mixed messages about buying a house in the military and how to go about it. Service-members have different factors to consider than homebuyers who aren\u2019t in the military \u2014 from affordability<\/a> with a housing allowance to what would happen if their orders change.<\/p>\n

According to the National Association of Realtors\u00ae, homeowners usually stay in their homes for 13 years<\/a>, which is plenty of time to build equity before selling. But service-members often don\u2019t have a choice about moving. What if you buy a house and then are deployed again in a year or two? If you had to sell, would you lose money, or could you rent your home (possibly to another enlisted household) instead?<\/p>\n

Homebuyers in the military can have a better buying experience if they ask themselves some key questions before buying. We talked to experts, including some military lifers, to pull together a list of the top questions to answer to make the best decision for you.<\/p>\n

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Source: (Joel Rivera-Camacho \/ Unsplash)<\/figcaption><\/figure>\n
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Should you buy a house while on active duty?<\/h2>\n

Before deciding to buy a house while on active duty, sit down and look at your overall situation. While Sandee Payne<\/a>\u2019s team helps more than 100 military families a year buy homes, she says that sometimes it actually doesn\u2019t make sense to buy. Before starting the homebuying process, ask yourself these questions.<\/p>\n

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How long will you be stationed at this base?<\/h3>\n

If you\u2019re going to be at a base two or more years, buying may be a sound financial decision. It\u2019s likely cheaper than renting, even if you\u2019re not staying long enough to build much equity<\/a>. And it will help your kids feel \u201cat home.\u201d<\/p>\n

If you\u2019re only going to be there a few years, ask yourself if you would want to move back after retirement or after leaving the military? If you do plan on returning \u2014 even if deployed elsewhere during the interim \u2014 you could rent the home<\/a> until retirement.<\/p>\n

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How close are you to retirement from the military?<\/h3>\n

If you\u2019re close to retirement<\/a>, it\u2019s easier to think about settling down. Once your military career ends, there will be less moving \u2014 but do you want to stay in the area where you\u2019re currently looking at homes, or go elsewhere?<\/p>\n

Maybe you plan on moving back to your home state. If so, you might not want to buy.<\/p>\n

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How much do homes cost where you want to buy?<\/h3>\n

The average cost of housing in your area will also influence the rent vs. buy discussion.<\/p>\n

In an area with higher home prices, you may need a bigger down payment (though you could qualify for a zero-down Veterans Affairs loan<\/a>), plus your closing costs will likely be higher. You might not have that cash on hand, or you might not want to take that much out of your savings. After reaching out to a local agent to learn about average home prices where you\u2019re shopping, you may decide that a home purchase isn\u2019t affordable or is too risky.<\/p>\n

If it\u2019s a hot housing market<\/a>, many buyers face multiple-offer situations that drive home prices higher. Think twice before paying above the list price. You can\u2019t count on the housing market remaining that hot for a one-to-two-year period, and you might have to move again before the amount you spent to buy the home \u201ccatches up\u201d to the market.<\/p>\n

At a minimum, you want to break even when you sell, so take the current market\u2019s home prices and where it might be in a few years into account when deciding whether or not to buy.<\/p>\n

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How much would your mortgage be?<\/h3>\n

Ask yourself how much of the mortgage your housing allowance would realistically cover, and how much you\u2019d have to take out of your paycheck \u2014 can you afford it? If you\u2019re planning on using a VA loan, how does that impact affordability<\/a>?<\/p>\n

In Payne\u2019s part of Texas, near Fort Hood, the median price of a house for sale was $273,130 in the fourth quarter of 2021<\/a>. She says that, \u201cVery often the BAH (Basic Allowance for Housing) is in line with what a mortgage looks like. But we also make sure that they know if it will also cover utilities and then some.\u201d<\/p>\n

She doesn\u2019t want buyers to overstretch and not be able to afford dance classes or football for their kids, so she says it\u2019s important to consider your overall financial situation. (Before becoming an agent, Payne\u2019s husband served in the Army for 23 years, so she\u2019s lived the lifestyle and knows what buyers should take into consideration.)<\/p>\n

If you\u2019re home shopping in a more expensive area, you might be able to lower your monthly mortgage payment by putting down a larger down payment<\/a>. The less you owe on the principal loan, the smaller your monthly mortgage payment.<\/p>\n

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Do you have a plan for what to do with the house if\/when you\u2019re transferred?<\/h3>\n

If and when you\u2019re transferred, you\u2019ll have two options \u2014 rent the house and become a landlord<\/a>, or sell it.<\/p>\n

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How much is rent where you\u2019re living?<\/h3>\n

You first thought about average rents for the area to see how much you might be able to save if you rent off-base instead of buying a home<\/a>. Now you\u2019ll want to consider how much income a home would generate if you rented it after moving. Would it cover your mortgage and other homeownership costs?<\/p>\n

Payne says that if a servicemember is going to be at Fort Hood for one to two years, and their intention is to purchase a home they use as a rental property when they leave, she makes sure they\u2019re not maxing out their budget for a temporary home. Often, they\u2019re planning on renting that home when they\u2019re deployed elsewhere.<\/p>\n

She looks at the rental market and asks, \u201cAre rents going to cover the mortgage this buyer is about to take on?\u201d<\/p>\n

Her goal is to \u201cmake sure they can afford it while they\u2019re here, and if it doesn\u2019t rent immediately, can they afford the mortgage for multiple months of the year if it sits empty?\u201d<\/p>\n

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Can you afford the closing costs when it\u2019s time to sell?<\/h3>\n

When you\u2019re buying, the seller pays the agent\u2019s commission<\/a>. But when it comes time to sell, you\u2019ll be responsible for the commission \u2014 typically 6% of the home\u2019s sales price \u2014 plus other non-commission closing fees. When they\u2019re buying, buyers in the armed forces should think ahead to the day they\u2019ll need to sell.<\/p>\n

In two years, your home typically won\u2019t gain 10% in equity, which you could use to cover closing costs. That\u2019s about what it costs for commissions, title fees, and other fees in Payne\u2019s area.<\/p>\n

When she\u2019s working with buyers in the armed forces who know they\u2019ll have to move again, she makes sure they have that money available. She advises them to \u201ckeep putting money away; it could potentially be an expense if you decide to sell. If it\u2019s not in your equity, the money has to come from your personal finances.\u201d<\/p>\n

If you\u2019re unsure whether you could set aside this much money during the time you\u2019ll live in the house, you might want to rent instead of buying.<\/p>\n

\n The VA funding fee can increase every time you use your VA loan.<\/q>\n
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