You know what they say … “Home ownership is the American dream.”
But before you buy, you’ll want to consider several factors, including how soon you’ll PCS, strength of the rental and resale market, whether you want to buy a fixer-upper or a move-in ready home and, most importantly, whether you can afford a home purchase and where to get the best rates and service on your mortgage.
“We were buying a house in Jacksonville, Florida, in fall of 2013,” said Navy spouse, Maureen Gawne. “We were first-time homebuyers so I had a lot of questions and anxiety about it.”
She was having issues with her lender, plus a federal government shutdown complicated matters more.
“I called my awesome realtor to find out what we needed to do and he directed me to call Navy Federal Credit Union,” Gawne said.
You can’t prepare for every contingency, especially something as a crazy as a government shutdown, but you can research and be as prepared as possible before starting the home buying process.
The first step is to estimate how much home you can afford. Online calculators give you a good idea, but you won’t have a firm answer until final approval for a mortgage. Be sure to consider all the costs of home ownership, including property taxes, utilities, repairs and maintenance.
This is the time to take a good, long, hard look at your credit report as well as your overall financial health. Credit score is just one factor lenders consider during the loan approval process. They’ll also look at your monthly income, savings and living expenses. They will typically only look at current information – not projected future income such as increases in pay or Basic Allowance for Housing, or a potential new job or promotion.
Unless using a VA loan, you’ll mostly likely need cash for a down payment. Remember to also factor in an emergency fund for unexpected home repairs (there are always unexpected repairs).
Be realistic, and remember that just because a lender is willing to loan you a certain amount of money doesn’t mean you can afford it. Conversely, you might think you can pay more than what the lender will approve.
Next, look online at real estate listings in the area you’ll buy. Drive through neighborhoods you like at different times of the day, and to and from work during the same time you’d be commuting. Look at the quality of schools. Even if you don’t have kids, schools can be a factor that affects future resale value.
Finally, if you have a spouse or partner have an honest conversation with him or her about what you both want in a home.
The next step is to decide whether you want to use a VA or conventional loan, and to secure pre-approval.
A common myth is that a VA loan is “easier” to get. That is not necessarily true. The biggest benefit of a VA loan is that you don’t need a down payment, although you can still put money down if you choose, and doing so will lower your monthly mortgage payment. Your lender can help you decide which option is best for you, and may even offer incentives of their own like special programs for first-time homebuyers. Remember to check out Navy Federal’s “no down payment” loan option if you’re buying for the first time!
Whether using a VA or conventional loan, you’ll want a lender like Navy Federal that has experience with the intricacies of home purchases by military families – things like possibly buying a house sight unseen, or doing a remote closing, or being on a short timeline.
You can apply for a loan and buy a home without your active duty member present, but it will take a little more footwork. Specifically, you’ll need a power of attorney. This is again where using a lender whose mission is to serve military members and their families is important.
Next comes one of the other big choices: A realtor. You can rely on recommendations from friends, or research online. Your lender might also offer a realtor-matching service like “RealtyPlus®,” which gives the buyer cash back at closing.
If you’re using a VA loan, it’s imperative your realtor has experience in that arena.
Now comes the fun part – finding your new home! Keep searching listings online. Your realtor will also work to find homes that meet your wants and needs. Narrow it down to three or four top choices, then compare price, condition, location and other factors that are important to you.
Once you find your dream home, the paperwork begins. You’ll make an offer, and likely negotiate price with the seller. You can also ask the seller for concessions like money toward closing costs or needed repairs. Next you’ll apply for final loan approval and go through the inspection process. You’ll sign all the paperwork and get the keys at closing.
AFTER YOUR PURCHASE
Consider living in your house for at least a year before you make any major changes that aren’t absolutely necessary. This will give you time to experience “real life” in your new home and decide what improvements – if any – you want. It also helps prevent the money drain experienced by many new homeowners.
Finally, sit back, relax, appreciate the accomplishment of purchasing your home – and start making memories!
Quotes were provided by a Navy Federal Union member