10 Tips Military Homebuyers Must Know
Although much of your planning, and many of your actions hinge on written orders, you cannot start planning the move too early. All too frequently, PCS orders and move planning occur when the military member is deployed, leaving the spouse with the challenge of planning the move while attending to that “small matter” of managing the household. Since our military training drilled us in organizational skills and methodical problem solving, and since many military specialties live and die by the “checklist,” we offer the following checklist as a point of departure for the “ideal military move.” It is worth stating again that you cannot start planning your move too early, and I recommend a house hunting trip (if feasible) of no later than 60 days prior to your desired move in date.
1. Get Pre-Approved
We know it’s tempting to jump right into the fun part of shopping around and dreaming about your future home and neighborhood. Trust us, there will be a time and place for that. But first, we highly recommend you speak to a home loan professional and get pre-approved. This way you will know how much home you can afford and also examine your financial situation. If there are any financial wrinkles to iron out, you’ll find out during this process. Getting a pre-approval will also help you compete in the real estate market. People will know you’re ready to conduct business.
2. Find a Realtor®
Contact your Realtor at your new duty station as soon as you have verbal or written orders. Determine the date of your house hunting trip and give your Realtor as much advance notice as possible to schedule adequate time, planning, and provide logistical assistance for you. Generally it is better to schedule too much time than too little.
3. Let’s Talk About Credit
Your credit standing will go a long way in determining how much in interest you’ll pay on a home loan. For some of those with poor credit, obtaining a loan will not be possible. But for the majority of future homebuyers, examining your credit standing will guide you toward better terms. Your home loan professional will help you understand what you need to work on to boost your credit score, and in the end, land a favorable loan.
4. Down Payment
Buying a home is expensive – it’s a long-term commitment and it will also hit you with unexpected expenditures. And one of the biggest upfront costs you will incur is for the down payment. Don’t worry, some loan programs can help you if you cannot afford a large down payment. But if you decide on a conventional loan and hope to avoid home mortgage insurance, you may need a substantial down payment. Consult with your home loan professional about the route that works for you.
5. Closing Costs
We told you buying a home is expensive. Closing costs are some other expenditures you will have to account for when buying a home. Escrow fees, title policy insurance fees, loan origination fees, county recorder fee, and so on are just some of the costs. Remember, you may also be able to negotiate with the seller on some of these.
6. Conventional vs. Government Loans
You may benefit from a government loan, such as an FHA or VA loan. These loans are typically offered with a fixed rate. The standards for qualifications might be a little tighter, but potential home buyers with a restricted budget could benefit greatly. Conventional loans, on the other hand, will require a larger down payment and even mortgage insurance. Check with your loan officer to talk about your options. Chances are, there’s a great loan program out there for you and your family.
7. There’s Even More Help Out There
Do not be discouraged if some of these tips seem out of reach. People with low- to moderate-income can also benefit from special programs. Private enterprises or state assistance like CalFHA can help you realize your dreams of owning a home. Some might even offer down-payment assistance that you won’t have to pay back until you sell your home.
8. Homeowner’s Insurance
As discussed earlier, there will be some unexpected costs to home ownership, or, a cost that you hadn’t quite thought about. Put mortgage insurance into this category. This type of insurance protects the lender from potential loss if you cannot make payment.
9. Seek Even More Help
We know you are doing your homework, but you can never get enough guidance during this important time. We recommend that you take homebuyer classes. These classes cover a wide range of topics that will be invaluable in your journey to homeownership. Classes cover how to pick the home and loan programs that may fit your need. The also cover home ownership responsibilities and saving for a down payment.