Hi all,
I recently PCS'd to Langley for my first full 3-year assignment (following multiple training assignments/TDYs) and my wife and I were considering buying our first home here. It would be our first time buying a house, and we're looking for some advice on VA loan vs. conventional loan, down payment vs. no down payment, resources to consider, etc. We really love the idea of having our own place (and not dumping money into rent each month like we're currently doing), and just want to make sure we're thinking in the right ballpark and making a smart decision. Between the two of us we're taking home ~120k annually pre-tax, the only debt we have is my career starter loan (of which 18k remains), and credit is good. We have about 12k in an emergency savings account, and could realistically afford a 10-15k down payment if we chose that route. Most of the houses we're looking at are in the 250k-300k range, and reasonably close to base. Open to any and all advice regarding first-time home buying in the military and/or lessons learned. Thanks!
Buying a home at first (3-year) assignment
byu/mountainsfishing45 inMilitaryFinance
Posted by mountainsfishing45
2 Comments
I mean, you don’t have a 20% down payment, so that route doesn’t make much sense. You would pretty much be looking at a VA or FHA loan and I might lean towards the VA since rates tend to be better.
At 7% interest, you would want to put down as much money as you can. Rolling the VA funding fee into your mortgage isn’t going to do you any favors since it just means you’ll have more high interest debt.
Be ready for how much you’re going to have in sunk costs. Between initial maintenance and closing costs, it felt like I was gushing money. I sunk around 7k just getting my first house with a conventional and 6k with my second as a VA.
The interest rate might help you out if you can find a good house. In theory, when interest rates go down, prices should go up, but make sure you can afford the payments with interest rates where they’re at. After only 3 years and a VA funding fee, you may also be upside down on your mortgage when you PCS, so also be prepared to take a loss there
I would honestly focusing on saving more before you pull the trigger and wait for your next duty station
Here’s what I would consider. If you purchase a Home with a mortgage, you’re dumping money into interest each month and barely building equity at first. You also spend a lot on closing costs. In general, the guideline is to rent if you’ll be there for less than 5 years.
What is it that you’d like about “having your own place”? Do you enjoy DIY, maintenance, and lawn care? Does your spouse enjoy those things? If your spouse doesn’t, do you expect to be gone a lot? Do you have pets that landlords don’t like to accommodate?
Are you looking at rentals and purchases that are comparable in size and type of housing? Have you considered base housing? Could you meet other Financial goals by renting a smaller place and pocketing some BAH?
How will you feel if you barely break even or are underwater when you need to sell? How long would you be able to afford a mortgage plus housing at the next location if you couldn’t get an offer immediately?
Are you interested in being a long distance landlord when you move? If so, have you researched the local rental market? Are the homes you’re looking at good rentals?