The Military Home Buying Process
Are you a military family considering buying a home? In this comprehensive guide, we’ll walk you through the essential steps and considerations for military relocations, making your journey from A to Z as smooth as possible. Let’s dive in!
Military Considerations When Buying a Home
Before diving into the home buying process. Ask yourself two fundamental questions:
- Do You Plan on Long-Term Ownership? If you intend to hold onto the property for an extended period, buying a home typically makes more sense. Real estate tends to appreciate over time, and owning property can be a smart investment.
- Will You Be Stationed for at Least Three Years? Military life often involves relocating frequently. To make buying a home worthwhile, you should anticipate staying in one location for at least three years. This allows you to build equity in your home and avoid going underwater, where you end up needing to sell for less than you owe on the mortgage.
The three-year rule gives you a safe bet, ensuring you have enough time for your home’s value to appreciate and your finances to stabilize. In certain market conditions, some have successfully sold homes after just a year without going underwater. However, it’s generally more advisable to plan for a more extended period of ownership. If you don’t anticipate that you will live at your duty station for at least three years, you may want to consider renting.
The 10-Step Roadmap for Home Buying
Now that you’ve decided whether you want to buy a home, let’s outline the 10 essential steps in the home buying process:
Step 1: Get Pre-Approved or Pre-Qualified – Understand how much you qualify for in terms of a mortgage. This step helps you set realistic expectations for your home search.
Step 2: Select Your Real Estate Agent – Choosing the right real estate agent is crucial. They will guide you through the process, help you find suitable properties, and negotiate on your behalf.
Step 3: Discuss Your Needs with Your Lender and Agent – Communicate your specific requirements for your future home, such as the number of bedrooms or preferred neighborhoods. This ensures everyone is on the same page.
Step 4: Begin Viewing Homes– Explore available properties through showings, which can be in-person or virtual. You may even find your ideal home sooner than you expect.
Step 5: Write Your Offer – Once you’ve found the right property, your real estate agent will help you draft an offer to the seller, specifying the terms and conditions.
Step 6: Negotiate the Terms – Expect some back-and-forth negotiation with the seller. In a competitive market, you may need to put your best offer forward.
Step 7: The Waterfall Step – This step takes place once you are under contract and includes conducting inspections, progressing with financing, and addressing title and escrow matters simultaneously.
Step 8: Transfer Funds for Closing – Your lender will let you know what you will need to bring in for closing. Generally, you will pay this with either a wire transfer or a certified cashier’s check, since cash and personal checks are usually off the table. You will also get a final statement from the title office and attorney’s office.
Step 9: Close on the Property – This step is where you sign the papers to actually own the home. Here’s good news for you: if you’re moving from out of state, you may not need to sign in the state you’re moving to.
Step 10: Take Possession – This is the step when you receive the keys to your new home and can start moving in. It’s important to differentiate between your closing date and possession date, as they may not be the same. Make sure these details are clearly outlined in your contract to avoid any confusion or delays in your moving plans. Oftentimes for military families, buyers will allow the sellers to rent back the property for a few weeks to allow them time to move out.
Remember, the home buying process can vary by location and individual circumstances, but this roadmap provides a general framework to follow.
Key Takeaways
Preparation is Key – Preparation should usually take place about 45 to 120 days before your desired closing date.
The Closing Time Frame – It ranges from from 15 to 45 days but is typically 21 to 30 days.
The VA Loan is a Powerful Tool for Military – It allows you to put 0% down without getting punished with private mortgage insurance (PMI), but can also reward you for putting money down. The VA loan can also have very competitive interest rates.
VA Appraisal vs. Home Inspection – It’s important to understand that the VA appraisal is not a substitute for a home inspection. While VA appraisers will check for habitability issues, they will not perform a complete inspection.
Get Your Team Together – Your agent and your lender will be there to help you every step of the process. Making sure you have effective communication with them to make decisions is crucial.
Key Terms
Under Contract: Signifies that both the buyer and seller have agreed to the terms and conditions, initiating inspections, financing, and title / escrow work.
Earnest Money: Also known as good faith money, this is offered along with the offer to demonstrate commitment to the purchase; it’s important to discuss with your agent whether it’s refundable or not.
Mortgage: A type of loan used to purchase a home.
VA Loan: A specialized mortgage product for military members, including veterans, Guard, Reserve, and active-duty personnel.
Closing Costs: Additional fees associated with buying a home, typically 1.5% to 3% of the sales price, covering taxes, insurance, title fees, and lender fees.
Appraisal: An assessment of a home’s value to ensure it matches the purchase price.
Escrow Account: A third-party account for depositing funds, which can also refer to a mortgage payment setup that includes taxes and insurance.
Contingency: A condition or requirement in a contract, such as a purchase contingent on an appraisal or the sale of another property.
Do’s and Don’ts in the Home Buying Process
Here are some important do’s and don’ts to keep in mind as you navigate the home buying journey:
Do:
– Get started as early as possible
– Get pre-approved early: Knowing your budget upfront helps you narrow your search and make informed decisions.
– Check your Certificate of Eligibility for using a VA loan.
– Choose a reputable real estate agent: A skilled agent can make a significant difference in finding the right home and negotiating terms.
– Communicate your needs: Be clear with your agent and lender about your preferences and financial limitations. Be sure to also communicate quickly to ensure you can close as fast as possible.
– Do your due diligence: Your agent and your lender are there to help you be informed, but they don’t make decisions for you.
Don’t:
– Overlook your closing costs
– Assume a VA loan appraisal is a substitute for a home inspection
– Overextend your budget
– Make any major financial decisions such as taking out new credit cards or car loans that could jeopardize your loan
– Assume that VA loans are slow. Here at WeVett we can close them in 30 days or less.
– Rush into a decision: Take your time to find the right property, especially in a competitive market.
– Neglect your finances: Stay on top of your financial obligations, and ensure all necessary documents are submitted promptly.
3 Ways to Improve Your Home Value
- Elevate Your Curb Appeal
Your home’s curb appeal is like its first impression—it matters a lot. Whether you’re looking to sell or just want to make your home more inviting, enhancing your landscaping can have a significant impact. Here’s how:
– Landscaping: Start with your front yard. Trim overgrown bushes, weed flower beds, and plant colorful flowers. A well-maintained lawn and garden create an appealing and inviting atmosphere.
– Porch and Entryway: If you have a porch, consider adding some outdoor furniture or potted plants. A fresh coat of paint on your front door can also do wonders.
– Lighting: Install outdoor lighting fixtures along the walkway and near the entry to create a warm and welcoming ambiance, especially in the evenings.
Remember, a beautiful front yard not only improves the value of your home but also makes it more enjoyable for you and your guests.
- Freshen Up with Paint
Painting is a cost-effective way to transform the look and feel of your home, both inside and out. When done right, it can breathe new life into your living space. Here’s how to make the most of it:
– Exterior Paint: A fresh coat of paint on the exterior can make your home look newer and well-maintained. Stick to neutral or timeless colors that have broad appeal.
– Interior Paint: Paint can completely change the mood of a room. Choose colors that reflect your style and create the ambiance you desire. Keep in mind that lighter colors tend to make spaces feel larger and more inviting.
Painting is a simple DIY project for many homeowners, but hiring a professional painter can ensure a flawless finish, especially for larger or more complex areas.
- Illuminate Your Space
The right lighting can have a significant impact on the overall feel of your home. Modernizing your lighting fixtures and ensuring a cohesive lighting design can increase your home’s value and create a comfortable living environment:
– Fixtures: Swap out outdated light fixtures with more contemporary options. Popular choices include black, silver, or the latest trends in gold fixtures.
– Bulbs: Consider the type of lighting you want for each room. Some areas may benefit from warm, cozy lighting, while others might need bright, white light for practical purposes.
– Consistency: Try to create a consistent lighting scheme throughout your home. It not only improves the flow but also enhances the overall feel and value of your space.
Incorporating these lighting improvements can modernize your home and provide a more pleasing atmosphere.
We hope that this comprehensive guide has provided you with valuable insights and information to make your journey from A to Z in the home buying process as smooth as possible. Best of luck in finding the perfect home for you and your family!
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