Whether you are planning to buy while in active duty or waiting until after your military service ends, planning now to be prepared to buy a home will make the process easier and less stressful!
Credit Score – Even while you are renting, a good credit score is a powerful tool in your next home search. Starting early to improve even an already good credit score will give you more options and flexibility when it comes to buying a home. Improve your credit score with these 7 strategies!
Down Payment – If home ownership is in your future, start saving now. While VA Loans offer a zero down option, having a strong savings account will improve your net worth.
Emergency Fund- There are more monthly costs to owning a home then renting – even if the monthly amount works out about the same. Plus, emergencies happen. There is a degree of protection with good home insurance and potentially a home warranty, but some savings in the bank is a smart back up!
Debt to Income Ratio – Before you begin applying for mortgages, it’s vital to address your debt-to-income ratio. Lenders look at this ratio when they are trying to decide whether to lend you money or extend credit.
Research Mortgage Options
A fixed rate mortgage stays at the same interest rate for the entire term of the loan, regardless of whether interest rates go up or down. An adjustable rate mortgage can go up (or down) based upon the interest rate market.
It’s possible to get an adjustable rate mortgage at a much lower interest rate than a fixed rate mortgage, but that also leaves you vulnerable to a rate that could skyrocket in coming years. Other adjustable rate mortgages (also called ARMs) include a very low introductory mortgage rate for five or seven years, then shift to a much higher rate. These loans are intended for home buyers who expect to live in their home a short period of time, to refinance at a later date, or to flip the home for investment purposes.
Military service members and veterans should carefully consider the VA Loan Benefit.