Almost any servicemember can afford to own a home with proper preparation. Develop a savings plan to build up money for a down payment at purchase, for moving expenses, and for post-purchase emergency expenditures such as needed home repairs. Remember, the larger your down payment, the lower your home loan payment. MilitarySaves.org can help you develop a plan with regular monthly deposits in a bank or credit union account.
At the same time, reduce your credit card debt and other debts in order to increase your ability to afford a house. Lowering these debts will increase your credit score and your chances of getting a lower-interest loan. What?s more, the InCharge Institute of America and Military OneSource are national resources offered in agreement with the Department of Defense. If you?re not an ID card holder, you can contact your local, non-profit consumer credit counseling service or housing counseling agency.
Purchase a Home
Get qualified for a home loan before you look for a house, condo, or co-op. That will give you some idea of whether you can afford to purchase a home and, if you can, at what price.
Make certain you contact at least three lenders, including your primary financial institution. This will help ensure that qualify for the least expensive loan. Be especially skeptical of uninvited loan offers you receive through the mail, telephone, or at your doorstep.
When looking for a home, most home buyers find that it is helpful to work with a real estate agent. Consider using an agent that will work solely for you as a buyer representative.
For additional information and advice, consult the Fannie Mae Foundation's home buying guide by calling (800) 611-9566 or find it online at www.homebuyingguide.org. The home ownership page of MilitarySaves.org lists additional sources of information and assistance.
Make Home Loan Payments on Time
Making home loan payments on time will help you build wealth and avoid costly penalty fees. If payments are missed, you could lose your home through foreclosure.
To help ensure that you can afford timely payments, maintain an emergency fund you can dip into when needed. There should be enough money in this account to pay for needed home repairs as well as emergency expenditures.
The easiest way to build an emergency fund is to ask your bank or credit union to automatically transfer funds monthly from your checking to your savings account. What you don't see, you won't miss.
If You Have Difficulty Making Payments Seek Help
Don't wait until you miss a loan payment to look for help. Seek assistance as soon as you are aware that you might have difficulty making payments on time. Contact your lender and keep in mind that all reputable lenders want you to succeed as a homeowner. Your lender will appreciate your call and should work with you to solve any problems.
Also, consider contacting the agency that provided counseling before you purchased your home. These agencies often have post-purchase programs to assist homeowners in trouble.
If post-purchase counseling is not available, contact a local, non-profit consumer credit counseling agency. They can help you work with all of your creditors to manage your debts successfully.
Be Cautious in Borrowing Home Equity
Remember that your home equity is wealth. If you take out a home equity, or other second mortgage loan, you are spending your wealth. Experts agree that some reasons for home equity borrowing are more appropriate than others. Certainly one legitimate use would be covering the expense of major emergencies, such as a big medical bill. Other appropriate uses include home improvements and education.
Experts believe that the least appropriate use for home equity borrowing would be for unneeded luxuries, such as an expensive car or a costly vacation. You should also try to avoid relying on home equity loans to cover basic living expenses except in transitional periods between jobs. Most importantly, make the decision yourself as to whether you need a home equity loan and, if you decide you do, contact at least three lenders.
Make a Plan
Set your home downpayment or home improvement savings goal today at www.MilitarySaves.org.
-- Military Saves is a social marketing campaign to persuade military families to get out of debt, stay out of debt, and save money. Join today at www.militarysaves.org.
A reader wrote in asking about the division of military retirement in a divorce. I have edited this email to remove personally identifying information and to make it more clear, but the gist is definitely still there: I am a MSG who will be retiring this year with 20 years of service. I was married […]