Married O-3 with young kids PCSing to Jacksonville, FL this summer. Looking to buy our first home. Looking for ANY advice: do's/don't, helpful links/resources/calculators, timelines, good contacts, whatever you guys may have.
Some info about myself: 800+ credit score, $35,000 cash, about $150,000 in investments.
Expecting to be out there for at least 4 years, but still unsure if I'm staying in the military past that. The only reason I'm hesitant on buying is if I decide I do want to get out and go back to school somewhere else. Not sure if this is the right line of thinking, but I would hate to feel forced to stay in because the housing market takes a dip and I'm underwater on a home.
First Time Home Buyer Advice
byu/Direct_Carrot8570 inMilitaryFinance
Posted by Direct_Carrot8570
8 Comments
Don’t buy a house. You don’t have enough for a down payment and you’re not committed to the area past 4 years. Plus the when you’re on active duty the military can move you or deploy you at any time.
Wait until you have better clarity on future plans and can commit to an area for ten years minimum.
Run the rent vs buy calculators to get a sense of the numbers: https://www.nytimes.com/interactive/2024/upshot/buy-rent-calculator.html
Why do you want to buy a house?
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Terrible buying market. FL has the highest homeowners insurance rates in the nation. Closer to the coasts the higher the rates.
Factor in the BAH though. If you stay on base or rent you are essentially forfeiting BAH. $2250 roughly in that area.
I would rent or base housing at first. See if the housing market cools. Save some more. Assuming that $150k is TSP and other non-liquid assets.
Definitely can see why owning with 3kids has advantages. Nobody is going to be underwater on a home anytime soon. We have the worst supply in 50 yrs. Even if unemployment went to 8% due to a major recession supply is still lagging demand by a large margin.
Evidence is even with rates at 20 yr highs home are selling above asking in many places.
There are zero people that bought 4 yrs ago that regret doing that right now. Zero.
Just buy. You clearly can afford. When PCS, rent it out. I’m enlisted and not rolling in dough like you O, but have bought 2 houses in my career. I have $600k equity in both. All with $0 down. It’s a great investment to build wealth. You can always refinance later when rate drops.
Buy a smaller townhome close to the base. Minimal personal upkeep
Rent it out if you get orders
Hi! We’ve used VA loans to buy. A couple things we learned along the way that I wish I’d known the first time:
– Make sure to factor in the VA funding fee. If you put 10% down, it’s often worthwhile to minimize the funding fee (more money down = lower funding fee).
– When you buy, consider what you like but also what potential future renters will like. If you’re unsure what the future holds (whether it’s a PCS or exiting the military), having a home you can rent instead of sell for a few years can buy you valuable time to allow the market to recover from changes. For example, I’d love to have some acreage, but a house with a smaller, fenced yard is generally easier to find renters for. School zones matter a great deal. Also consider durability: You likely want to buy a home that’s not in a flood zone, doesn’t have an older roof / AC unit, etc. The last thing you want if you eventually have to rent the home out is to have to replace these sorts of major items remotely.
– Speak to an insurance broker early — in hurricane-prone areas and anywhere along the coast, insurance policies can be both expensive and difficult to find. You’ll also likely be required to have flood insurance. Make sure you’re as prepared for these expenses as you can be so that you can adjust your expectations (and budget) accordingly.
We know plenty of military peers who exclusively rent, but we feel that there are lots of perks to owning. We have accepted that it may be a suboptimal financial decision in certain instances, but there is value (for us) in the emotional benefits of owning vs. renting. Just make sure to diversify (index funds, mutual funds, etc.) so that you’re leveraged in multiple markets and don’t have all of your assets in real estate. This has made the biggest difference for us over time.
Best of luck to you!
We are currently closing on a VA assumed loan. I’ve learned it has its pros and cons, but It’s ending up being a great deal for us, if it all goes through it will be an assumed 2.7% loan. If you’re buying in a military busy area, you can search for these.