Military Home Buyers Guide

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You can find home buyer guides, but this is the "Military" Home Buyers guide written specifically for the unique challenges of military life. This guide will help you understand your options as a military home buyer.


1. Getting Started

It does not matter if you are a first time homebuyer or if you own several properties. There are things you need to know, and this guide can help. Please take a few moments to carefully read about the home buying process.

Making the decision to buy a home is certainly one of the biggest you will have to make. It is a big commitment and one that can be very intimidating. But it does not have to be scary. Having an understanding of how the process works and what is required to be a home owner can put you at ease and make owning a home very rewarding.

2. Are You Ready?

People decide to buy their first home at many different stages of life. Some wait until their careers have stabilized and they know where and how much they can afford before buying. Others start much earlier while some wait until near retirement to buy that first home.

However big the task may seem, homeownership is not something that you must wait for. Just because you are still getting your career started, or you know you will be moving again in a few years, are not reasons to wait. In fact, buying a home may help.

Military families move often. This is a fact that we cannot ignore, but that does not mean you cannot own a home. In fact, about 40% of active duty families own homes. The rest choose to live in government housing or rent. Owning a home can bring great financial rewards, but we must not ignore the fact that it can also be devastating.

3. Can You Afford to Buy?

Owning a home is the biggest financial commitment most people face. However, for those in the military, having Basic Allowance for Housing is a huge benefit most civilians do not have. You can take your BAH and apply it to rent and pay someone else's mortgage, or you can apply it to your own.

When considering a home, do not plan to spend 100% of your BAH on a mortgage payment. You must calculate all of your utilities, maintenance and homeowner's association dues as part of your monthly housing cost. Many members, while renting, only have to pay for electricity and gas and therefore can afford more house for their BAH. But it all changes when you buy. Now you must consider insurance, property taxes, water, trash and possible other monthly fees. In addition, you are now responsible for the upkeep of the home when something breaks.

4. Qualifying for a Mortgage

If you feel you can afford the cost of home ownership, then the next step is to get a pre-approval from a lender. Just because you can afford the monthly payment does not mean you will qualify for a home loan. When you buy a home, you are essentially using someone else's money. So, they need to make sure there is an acceptable level of risk by giving it to you. When you apply for a loan, a lender will review your credit report to see how much debt you have and to see how well you pay your bills. If you are consistently late or carry a lot of debt, a lender will think twice about loaning you money.

Having less than perfect credit does not mean you cannot qualify, you may simply pay a higher interest rate to help the lender offset the risk involved.

If you know you are planning to buy a home, try to pay off as much debt as possible. Do not make any large purchases or make new financial commitments like buying a car. Wait until after you buy the home.

5. Where to Apply

It is important for you to understand that shopping for a loan is just as important as shopping for the home. Most people take it for granted and simply apply and accept a mortgage from any bank without careful consideration. However, this is a risky business and you need to consider a few facts.

People are most concerned with the interest rate and what that means to their monthly payment. However, interest rates are only one factor in the bottom line. You must also consider fees and points (1 point is 1% of the purchase price) that the lender may require. To make sure you are getting the best loan, you will naturally want to compare what several lenders offer, but even this is hard to do. Each lender may have a slightly different loan to offer and different fees or points they charge. Even the interest rate will be different. Your credit score and risk largely affect interest rates. Each lender has their own requirements to qualify people and may review your risk differently. This affects what rate they offer you.

Comparing offers from different lenders will require you to apply with each one because no one will provide you a rate quote without first reviewing your credit score. But this has negative impacts on you. First, by applying with many lenders each will run a credit check to get your report. Each time a creditor runs a credit check; it negatively impacts your score. Secondly, because mortgage rates are adjusted throughout the day, it will be hard to compare rates, fees and points unless all the lenders offered the same loan type with similar fees, and all quoted you a rate at the same time of day. Then you could honestly see who offered the best deal.

Your best option when applying for a loan is to find a mortgage broker. Many people think of mortgage brokers as middlemen. True, they are, but this does not mean you are paying for a middleman.

Brokers have access to loans from many, sometimes hundreds of lenders. The lender offers a loan at a wholesale rate to the broker. A broker will run your credit report one time and input all your financial and other qualifying information into a computer system that will then electronically check the loan products from all the lenders at one time. By doing this, a broker can easily see what each lender charges for fees, what rate they offer based on your credit score and can easily find the best loan for you.

Because brokers get wholesale rates from lenders, they will often add a 1/4% to as much as 2% to the rate. This is how they make their money. Scrupulous brokers will then also charge you a loan generation fee often equal to 1% of the loan. So when you look for a broker, you need to make sure they are working in YOUR best interests and not their own. A good broker will disclose the wholesale rate and show you how much they will make for processing your loan. It is acceptable that they make 1% - 2% on the loan.

The Military Mortgage Center hosted on Off-BaseHousing.com and MilitaryMortgageCenter.com has a third party broker that has agreed to find the best loans in the interests of the buyer with NO junk fees, low standard fees, and offers very competitive rates.

We highly recommend you contact the Military Mortgage Center and speak to a loan officer before you apply anywhere else.

DISCLAIMER - The Sponsored broker pays Off-BaseHousing.com a small referral fee but does not pay a fee based on commissions. This is industry standard to pay a referral fee for each client that is generated from a third party like Off- BaseHouisng.com. YOUR fees and rates are not impacted. The lender pays a referral fee to Off-BaseHouing.com even if you choose not to use the broker. WE DO NOT sell your information or provide your information to any other lenders / brokers. Our sponsored broker only gets your contact information if YOU choose to contact them first via phone, application or emailing from our website.

A mortgage broker will consult with you on your loan options. Typically a VA loan is the best option for military families; however, there are other creative loan products that may fit your situation better. Only a mortgage broker, such as the one found at the Military Mortgage Center, can provide you with expert consulting that is unbiased. A bank or lender will try to sell you their loan, even if it is not in your best interest.

6. Pre-approval

Getting a pre-approval is very important. It not only states what you qualify for so you know how much you can afford, but it is a guarantee to a seller that you are ready to buy. If you are shopping for a home in a competitive market where homes sell quickly, it is not uncommon for a seller to receive multiple offers on the home. If you are not pre-qualified, the seller will most likely accept an offer from someone who is, because they do not want any surprises. Unfortunately, many buyers go shopping for what they think they can afford, only to find out later they cannot get a loan. This takes time and opportunities away from the seller, so they almost always will accept the offer from a buyer with a guaranteed loan.

Getting a pre-approval requires you to apply for a loan. Just as mentioned above, the lender/broker must know what level of risk you are to them, and how much you can afford.

7. VA Eligibility

If you apply for a VA loan, you will need your VA Eligibility Certificate when you submit your application. If you do not have it already, you can download the request form from the Military Mortgage Center and mail it in. The VA does not provide an electronic form at this time, so this process will take a couple of weeks before you receive your certificate.

However, if you are in a hurry and need a loan fast, the sponsored broker found on the Military Mortgage Center can get an electronic approval from the VA! This can be done in about 24 hours, but it requires you to apply for a loan with the broker. Considering what we discussed about brokers, there really should not be any reason for you to hesitate.

8. When to Start Looking

If you have decided the time is right to buy a home, then the time to start shopping is now! If you are relocating and know you want to buy upon arrival at your next duty station, do not wait until you get there. Chances are you already started your research online and that is how you found Off- BaseHousing.com. Continue your research, get pre-qualified so you know how much home you can afford, and then contact a real estate agent. Even if you are months away from relocation, you need to start looking at homes. This is important because you will start seeing how much home your mortgage will get you. As you review homes online and discuss what you are looking for with an agent, you will have plenty of time to compare homes and get to know the housing market.

NEVER make an offer on a home without seeing it. Pictures may look great or your agent may say it is a deal you cannot pass up. If this happens, kindly ask your agent to release you from your buyers contract and find a new agent!

9. Finding the Right Agent

Finding the right agent is key to a successful and stress free home buying experience. It is important to know that not all agents are alike, and not all are worthy of your business. An agent will carefully interview you to understand what you are looking for, and then work hard on your behalf to find that home.

You can find an agent online or get recommendations from someone that has experienced a good agent, but do not take someone's word for it: do your research. It is ok to contact several agents while you look for someone to assist you.

HOWEVER, you cannot make a verbal or written contract with an agent until you have chosen one and this needs to be clearly understood. Once you contact an agent with the intent to use that agent to find a home, you cannot contact another until your verbal / written contract has expired or been revoked. If you do contact another agent and use the second agent to buy a home, that agent may be liable for paying a fee or part commission to the first agent you contacted. Real estate laws and governing ethic rules are strict on agents to prevent agents from trying to steel clients from other agents.

Usually, your agent (the buyer's agent) will not charge you and should not charge you a fee. Their services for helping you are FREE. They get paid from the commission of the seller's agent. Typically a seller pays 6% of the sales price to the selling agent. That agent then splits the commission with the buyer's agent.

If your buyer's agent asks for a fee from you, find a new agent fast!!

Real estate agents on Off-BaseHousing.com have agreed to help military families and have agreed to discount their services by 1% of the sales/purchase price. This means that if you use a participating agent, 1% of the sales price will come back to you! It may be applied to your closing cost, or in some cases it may be cash back!

The real estate market is very competitive and there is absolutely no reason why a military family should pay 6% to sell a home, or not get a discount for buying one.

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