We appreciate your service to our country and we understand the decisions and opportunities you face as a military homebuyer.
There are many benefits to homeownership such as, housing costs, making your house a home, and of course tax benefits.
If you are a renter, you have probably heard: “why are you paying your landlords mortgage?” As a homeowner you know what your house payment will be and you will also be building up equity in your home with every payment you make because you are paying down the principal balance of your loan.
If you’ve ever been inspired by home design shows, this is your chance to decorate your living space with your tastes. If you’ve been renting, you will have more opportunities to decorate your home to reflect your personality with paint, window coverings, landscaping and more. “A home is a place to call your own.”
If you are active military, you are most likely receiving a Basic Allowance for Housing (BAH), which is meant to provide you with compensation for housing based on the housing costs for the area where you are stationed. Because this allowance is tax free, you have a tremendous opportunity to buy a home and build equity using tax-free funds. As a homeowner, you may also be able to receive a tax deduction for 100% of your mortgage interest, provided you meet the guidelines. And let’s not forget your property tax deduction as well.
Now that you know the benefits of homeownership, it’s time to get started. From house hunting to putting in an offer, there are many things to learn on the road to homeownership. How much do I qualify for? Can I get a VA loan? What are the other expenses associated with home ownership?
No matter what your income is, it’s important to look at your finances and find out what you can afford before you start your search for a new home. What kind of payment do you feel comfortable making every month? It’s easy to fall in love with a home that’s out of your reach. Having a total cost in the back of your mind when you start shopping will help you stay on track.
Talking to a mortgage lender that specializes in VA loans is your next step. They will discuss in detail how much you qualify for in terms of your income, debt and mortgage payment. Typically paid in monthly increments, your monthly loan payment will be made up of four parts, commonly referred to as PITI:
P = Principal The amount left on your loan apart from the interest
I = Interest The interest paid in monthly increments for the life of your loan
T = Taxes Your monthly property tax payment (approximately 1/12 of the total property tax for the year)
I = Insurance Referred to as hazard insurance or homeowner’s insurance, this coverage protects your home and certain possessions, and can help protect you from liability claims or lawsuits for accidents on your property
The components of PITI will typically make up your main home expenses each month. When estimating your monthly budget, you will also need to factor in these possible monthly costs:
Homeowner Association (HOA) fees: A homeowner association is an organization that enforces covenants and rules for the community and maintains shared property, such as open spaces, parks and community pools. If you buy a home in a community with a homeowner association, you will become a member of that HOA, and will be responsible for any HOA fees. Be sure to investigate the cost of membership ahead of time to make sure the added expense is within your budget.
Private Mortgage Insurance: Private Mortgage Insurance (PMI) is a form of insurance typically required for homebuyers who take out a conventional mortgage loan for more than 80% of the total value of the home. This added insurance protects the lender against loss if the borrower defaults on the loan. If you opt for a loan guaranteed by the Department of Veterans Affairs (VA), PMI is not required.
Monthly mortgage insurance for Homeowners with a Federal Housing Administration (FHA) insured loan are required to pay monthly mortgage insurance, even if they make a larger down payment. VA home loans do not require monthly mortgage insurance.
Many service members choose to take advantage of VA financing because of these main benefits:
• You may purchase a home with no down payment, subject to VA guidelines.
• You may choose a fixed-rate or an adjustable-rate mortgage.
• There are limits to the amount of closing costs you will have to pay, and you can ask the seller to pay your closing costs when you put an offer on a home.
• You are not required to pay monthly mortgage insurance or PMI.
ARE YOU ELIGIBLE FOR A VA LOAN?
You might be eligible for a VA loan if:
• You currently serve on regular active duty in the military.
• You have served on regular active duty in the military and have since been discharged.
• You have served in the Selected Reserves or National Guard for at least 6 years.
• You are an unmarried spouse of a veteran who died on active duty, or as a result of a service-connected disability.
Other conditions may apply and special documentation may be required as proof of your service. Visit the Department of Veterans Administration and select Eligibility for complete details.
Kathy was a mortgage lender for 15 years and has worked with many military buyers and sellers during her 27-year career in real estate.
When you are ready to sell or buy your home, we at Springs LifeStyles Real Estate are here to help you with all of your real estate needs! As your buyer agent, we will strive to give you the best support we can. Call Kathy Stenberg at (719) 963-4867 or you can email her at email@example.com You can also visit us at our website for available listings and additional information.