Financial Firsts: Purchasing your first home

February 29, 2016



This story is provided and presented by our sponsor Navy Federal Credit Union, a U.S. credit union headquartered in Vienna, VA, serving the U.S. Armed Forces and their families, chartered and regulated under the authority of the National Credit Union Administration. For more information, visit navyfederal.org.

We've all pictured it – the American dream. White picket fence, kids running in the backyard, steaks sizzling on the grill. As a member of the military, you're sworn to protect that dream while also creating one of your own. Homeownership has always been a large part of the American fabric and is one of the biggest purchases you'll make in your life. First-time homebuyers should take time to research and find out who helps them along in the process, what paperwork they'll need and ultimately decide if buying a home is a good choice while serving.

Choose Who You Work With

As with any big purchase in life, the first step is research. Most people start online or even call their trusted financial institution. There are advantages here – research costs nothing. For example, calling Navy Federal about the home-buying process only takes a few minutes of your time. Following your research, you'll want two key people on your "home-buying team."

The first person you need on your team is a real estate agent. They know the market, will help you find a home that fits your lifestyle and can guide you through the home-buying process. Particularly for those in the military, finding a trusted realtor can go a long way. You might not know the market you're moving to, but your agent will!

The other person you'll want on your side is a loan officer. This person will help you secure the loan that puts you in the home you've found with your realtor. They work with you in terms of what documentation you'll need and set you up with a pre-approval, basically letting you know what you can afford. Your loan officer has specialized training to help you get the best rate and loan that fits your budget.

Navy Federal has the ability to not only provide a loan officer, but has a network of real estate agents in your area to help you find the house you're looking for. The RealtyPlus® program links you up with an experienced professional that provides guidance through the process and has intimate knowledge of the community and neighborhood you're looking at. Research is easy when you have a one-stop shop for mortgage education.

 

 

Paperwork, Paperwork and More Paperwork

In the military, you've probably gotten comfortable in providing documentation. Whether it's getting orders to a new duty station or a pre-deployment checklist, having the proper paperwork makes any process go smoothly. Buying a home is no different. Eligible Active Duty and veterans can use a VA loan for their new home. A VA loan is the most popular mortgage product for those who are serving or who have served, but there are many options to finance your home.  

Those applying for a VA loan will need some special documentation in addition to the normal paperwork your loan officer will require. The first step is to obtain a Certificate of Eligibility, or COE. The COE verifies that you're eligible for a VA loan. You can get this either by visiting the U.S. Department of Veterans Affairs website, or you can work with your financial institution.

To get a COE, veterans will need their DD Form 214. This is the form you get when you out-process from your duty station. Make several copies of this form, as you may need it throughout the mortgage process in addition to job opportunities and other proof of service inquiries.

Active Duty servicemembers will need a current statement of service to get their COE. Make sure your personnel office, unit commander or higher headquarters signs it. This form contains basic information like your birth date, dates of service, etc. Typically your orders contain most of the information. Gathering the paperwork is half the battle. Finding your house is the fun part!

Rent or Buy?

According to the National Association of Realtors, veteran homeownership rates have been higher than those who have never served in the military. On the other side, Active Duty members have a lower rate of homeownership than that of their non-military peers. So does this mean you shouldn't buy until you leave service?

The short answer is that it depends. On average, most military stay at one location about three years. If you're in uniform now and at a duty station for the time being, go ahead and investigate. If you do PCS, you can always sell your home. Or, if it's in an area with high turnover, you can rent to other service members (after all, you know they're clean-cut!). Not to mention, if you keep that home and it's in a location you enjoy, it can be a place to consider retiring to.

Rates are still at historical lows but may not stay that way forever. While there is no need to rush to get a good rate, continue to monitor whether the Federal Reserve raises rates. Typically, a Fed rate hike doesn't impact mortgages in the short term. Understanding rates puts you in the driver's seat during your decision.

Consider the benefits of the VA loan before deciding whether to rent or buy. With finance options up to 100 percent and no Private Mortgage Insurance (PMI), veterans and servicemembers have the advantage of a fixed-rate loan with no money down.

The home-buying process can seem daunting at first, but the journey is made much smoother by arming yourself with information. Your two guides through the process are your real estate agent and loan officer. Their job is to help you house hunt and find the right mortgage for your financial lifestyle so you can live your American dream.

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Navy Federal is an Equal Housing Lender.

This story is provided and presented by our sponsor Navy Federal Credit Union. For more information, visit navyfederal.org.

©2015 Navy Federal Credit Union. All Images used for representational purposes only; does not imply government endorsement.