Whether you’re looking to live off base or starting an investment opportunity in real estate, active-duty service members may want to consider the benefits of home ownership. Before committing, there are several important tips to help you prepare.
1 – Identify Financial Benefits Available to Service Members
Military members have access to several financial options that can help support their goal of buying a home. You can use your BAH can toward monthly mortgage payments in lieu of rent payments and leverage that benefit to build home equity and long-term wealth. Find out if you qualify for other financing options such as VA Loans, FHA Loans, and USDA Loans to help you buy a home with greater flexibility and benefits than a traditional loan. Depending on your specific situation, you could find financial support options on both a down payment and monthly payments.
2 – Weigh the Options of Renting Vs. Buying
While buying a home can be a great investment, it may not always be the right decision for every individual/family. Renting a home or apartment can sometimes be a more cost-effective option. Renting often provides active-duty service members with the flexibility to deal with a PCS while avoiding the added home maintenance costs. However, buying creates an instant investment that builds wealth over time. Everyone’s situation is different, so we recommend you list out your specific advantages and disadvantages between buying or renting before making any decision.
3 – Revisit your Budget
Revisiting your budget before buying is great advice for anyone, regardless of if you’re in the military. With a well-defined budget, you can plan out what percentage of your paycheck will go towards a monthly mortgage and determine the places you can cut costs in your everyday life to prepare for the expense of moving. Your budget will also impact the size/type of home loan you’re looking for. On The Edge, you can find helpful tools and resources, like the Home Affordability Tool, How To Qualify For A Home Loan course, personalized budget builder, and more to make planning easier.
4 – Consider the Costs of Renting Out Your Property
Turning your home into a rental property can be a lucrative investment, but it has trade-offs too. Managing a property with tenants, maintenance costs and unique insurance requirements requires time. Renting your home can supply residual income and help you pay off your investment without having to use your own funds. However, if you are planning on renting out your home, we recommend first establishing an emergency fund specifically for your property. With the risk of property damage or a lack of tenants, this emergency fund ensures your investment doesn’t become a financial liability. Other risks, such as reduced BAH payments in your new location and the need for a property manager, can also affect your ability to turn a profit, so make sure you are prepared.
When it comes to home ownership, the good news is you’ve got options and benefits to leverage. With the right planning, you can make the most of your investment. For more tools and resources free for military families, visit govafoundation.wpenginepowered.com/the-edge.
