Financial Checklist for a PCS Move
The Bottom Line: Military servicemembers and their families move far more often than the average American. Moving is an expensive and time-consuming experience. You need to be prepared and organized, in order to make your move as cost-effective and stress-free as possible. Focus on setting a budget, reviewing and protecting your credit, and knowing the best way to sell your home, to make your move a successful one.
The peak season for Permanent Change of Station (PCS) is beginning. If you are scheduled to move there is so much to do and it is easy to be overwhelmed. Military.com has a lot of good information about PCS, including checklists and articles regarding the basic steps you should take. This article focuses on the financial basics you should cover when preparing to move.
- Clean Up Your Credit
- Budget for Your Move
- Selling Your Home
You credit score is very important at all times, but especially when it comes to relocating. It affects your ability to rent a new place to live, the interest rate you’ll pay on a new mortgage, even your rates for a new auto insurance policy.
The first step is to check your credit report. You’re entitled to one free credit report from each of the three credit bureaus every year, at http://www.annualcreditreport.com. Start by pulling just one bureau’s report and check it for accuracy. The FTC reports that one in four consumers find errors that can affect their credit score. Dispute any inaccurate items that appear on your report to repair your credit.
If you plan on buying a home, take the extra step of speaking with a mortgage lender. They will pull your credit and also check your credit score. This will give you an idea of how much you may need to raise your score in order to qualify for the best interest rates.
Keeping a normal household budget by tracking your monthly income and expenses is a basic step to maintaining financial security. If you don’t have a budget, make one. There are a lot of free budgeting tools available online, including the ones at Mint.com and Bills.com. Even if you already have a budget, you’ll need to adjust your budget to cover all the costs associated with moving.
A good first step when budgeting for a military-related move is to figure out which expenses may be covered by the military and what you will have to pay on your own. You’re not in this alone. You have access to your service branch’s relocation office. The relocation office will let you know what expenses the military will cover for you and what will be your personal responsibility. This will help you figure out the best method of moving for you and your family.
Look into the DITY (Do it Yourself) moving program. If you plan carefully, it may save you a lot of money and give you more control over the entire process. DITY allows for reimbursement of 95% of what it would cost if the government moved you. If you spend less than that, you get to keep it. In DITY, you are still eligible for standard travel allowances.
Selling Your Home
When you receive PCS orders, you may not have lot of time to take care of everything on your plate. If you own a home, then you have one more crucial item on your to do list. The options that you have for selling your home are very different depending on whether or not your home is worth more than you owe on it. Additionally, you may decide to rent out your current home, instead of selling it.
If you are fortunate enough to own a home with equity and you want to sell it, here are a few quick tips:
- Get a referral- Odds are that you have a friend, neighbor, or acquaintance who can recommend a real estate agent. Having a professional guide you will save you time and effort. Having one that comes with a recommendation gives you extra peace of mind. A quality professional will: market your home effectively, help you prepare your home for an open house so that it makes the best impression on buyers, and guide you to set the sale price wisely.
- Taxes -Be sure you understand your obligations for capital gains you realize for a sale. Military servicemembers may be eligible for some extra flexibility; such as if you rented out your home due to your military service requiring you to go on "qualified extended duty."
- Be prepared- You have to be very organized to sell your home while you are getting ready to move. Your home will sell faster if you are ready for a buyer to come by at a moment’s notice. Work to keep your house neat and orderly, even when you’re dealing with the chaos of packing to move.
Selling Without Equity
Selling your home when you owe more than your home is worth is difficult. Unfortunately, because home prices have fallen substantially in many parts of the country, many people are now underwater.
To sell an underwater home, you need to work out a solution with your lender. One solution could be to negotiate a short sale. You can also speak with your lender about a deed-in-lieu of foreclosure. Either way, make sure you understand your responsibility for any balance that remains after your house is sold, or what is commonly called a deficiency balance. In some states, the lender cannot collect a deficiency balance for non-recourse loans. If you are facing a deficiency balance, find out if your loan is a recourse loan or a non-recourse loan.
If you are moving due to a PCS, make sure that your lender knows that. Following guidelines set by the Consumer Financial Protection Bureau and other government agencies, your mortgage servicer has extra obligations for borrowers who are moving due to a PCS.
Your options may also be different depending on whether you have a VA loan or not. If you have a VA loan, look into the VA Compromise Sale program. This program may allow you to sell your home for less than you owe, with the VA paying the difference between the sale offer your receive and the remaining balance on your mortgage.