Purchasing a home for a military family can be daunting, but it doesn’t have to be. Sure – finding that perfect home is exhausting. Debates over bathroom and bedroom sizes will always occur, but the mortgage part can be the easiest aspect if you start by asking the right questions.
When settling on a potential mortgage lender, it is advisable to start by choosing one who is familiar with working with military families. We are busy enough, and nobody has time to explain to them how to read an LES or why your spouse isn’t available to talk during normal business hours. Look for a Military Friendly Brand® or even a lender with a specific military lending department.
Once you’ve made your decision, it’s time to make a list of questions.
What type of mortgage should I get?
- For many military families, the VA Home Loan will be the way to go. It offers the attractive benefit of not putting money down and thanks to the passage of The Blue Water Navy Vietnam Veterans Act of 2019, loan limits have been removed. This loan benefit also comes with no requirement of private mortgage insurance (PMI) since the VA is guaranteeing the loan. If you choose this option, you’ll need your Certificate of Eligibility (COE). This will be necessary for any lender you choose.
- Traditional mortgages are also a popular way to go. These require a down payment of 5% to 20% as well as a minimum FICO® credit score. The interest rate on these loans also tends to be a little higher than the VA Home Loan but they tend to close a bit faster.
- An Adjustable Rate Mortgage (ARM) is another option, but one that should be examined thoroughly before choosing. ARMs come with more requirements now but still pose a risk with fluctuating rates and payment amounts. This route will require deep research and an ability to absorb risks.
What will my monthly payment include?
- Depending on the type of mortgage you select, your payment could look a little different. For those who are not required to pay for PMI, it is relatively simple. Your payment will be the principal and interest on the loan. This is considered your mortgage payment, but it isn’t all you’ll be sending.
- Home insurance is required and for the majority of the lenders you approach, you’ll be required to escrow both this insurance and your yearly taxes. This is why it is important to properly calculate your budget for your home. It doesn’t just come down to your mortgage. Research housing insurance and yearly taxes for the area you are home searching in. This will help you estimate your true monthly costs.
Other important questions for lenders:
- Do you handle underwriting in-house? This means they will be doing all of the mortgage work themselves, instead of having a third party handle it.
- What will the closing process look like? Every lender and area does things differently. It is good to ask this question up front so you are prepared for whatever the requirements are.
- What is your loan processing time? If your family is going through a permanent change of station (PCS), this is a really important question to ask. We have to be in certain places by specific times, which means we have less leeway to change closing dates. Be up front with your lender on what your needs are.
- Will you sell my loan? This happens, a lot. It shouldn’t necessarily be scary if they say they will, but it may cause a little annoyance. Selling the loan just means the payments will be made to another company – nothing else will change.
While buying a home comes with a lot of responsibilities and headaches, it is also a joyful time. As military families, many of us are used to either living in other people’s homes we can’t change or on a base where we are even more heavily restricted. Having your own house is a heady and deeply freeing feeling when the military controls most aspects of our lives. In purchasing a house, home can finally be wherever you are.
Military Spouse & Blogger