Home Buying When You're in the Military

Typical daily purchases are as simple as selecting an item and paying the cashier, but purchasing a house is completely different. Before buying a home you have to do your homework. You'll want to shop around for a house within your budget that fits your needs. But, if you're a first time home buyer or you're a little rusty, you may have some questions such as how to negotiate price, how to apply for a loan, how much you can afford to spend and what financial resources are available.

In the early stages of house hunting, the price of a house is just a number on a piece of paper, and you may be tempted to inch over your budget for extra bells and whistles. Remember that the harmless number on the page will eventually translate into your mortgage payment each month, and you need to be sure that your payment is manageable on your budget. Purchasing a home over your budget can put a strain on finances and could keep you from meeting your mortgage payments. Failure to pay your mortgage could eventually result in a foreclosure, a scenario in which your lender takes over ownership of your home if you fail to make payments. Foreclosure and other financial strains are easily avoidable by understanding your budget before shopping for a home and a loan.

Budgets and loans

So, what is your budget? Before you even begin looking at houses and applying for loans, map out your monthly income minus expenses. Be sure to include expenses like car and credit card payments, gas, groceries, insurance, utilities costs, and savings or investments. Look at your spending over several months, and decide if you're able to take on a mortgage payment without stretching yourself too thin.

Understanding your budget is essential when applying for a home loan. You may be approved for an amount over your intended purchase price, but that doesn't mean you should necessarily buy based on the amount you're approved for. Stick to your budget because you know better than anyone what you can afford. A good rule of thumb to follow is that your monthly mortgage should not exceed more than 35 percent of your income. Shop around for the lowest interest rate before choosing a lender, and consider your loan options, including Department of Veterans Affairs loans.

For more information and guidance on home financing, your rights as a buyer and understanding what you can afford, visit the Home Buying page from the Department of Housing and Urban Development.

Frequent moves

Frequent military moves shouldn't discourage you from buying a home if you're ready for the investment. However, there are additional things to consider, including whether you plan to sell at the time of your move or if you intend to retain your house as a rental property. Be sure that you're aware of the possibilities that your home may not sell, may sell below your asking price or you may have a gap in renters, and be financially prepared for these scenarios.

As you consider your options, reach out for support and more information. You can contact the Personal Financial Management Program at your installation for classes on a wide-range of financial topics, seminars and financial counseling services. If you do not live near an installation, you can also speak to a financial counselor at no cost by contacting Military OneSource at 800-342-9647. Get the help you need to take some of the uncertainty out of your home buying decision, and make it easier for you to put your best financial foot forward.


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