First of all – I’m going to be signing “Heroes at Home” at MCRD (Marine Corp Recruiting Depot) in San Diego at the MCS from 2:00 to 4:00 on January 31, 2013. So please come by and say hello and I’ll be happy to answer any military family finance questions you may have!
We lived in eleven different military houses in the first thirteen years of marriage. We weren’t exactly thinking about the American dream of owning our own home, we were just satisfied if the carpet came with the house and we could get enough bedrooms to have the kids only sleep two to a room! But, eventually, we slowed down our military moves long enough to buy a home and it was worth the wait.
Whether you are a reservist, guard or active duty, you may be in a position to ask a very common question in today’s economy—is now a good time to invest in a home or should you rent? Here are some ideas to help you determine the housing climate for your situation.
Sunny Skies for a $5,000 Grant for YOU
The “Dream Makers” program from the PenFed Foundation offers grants up for $5,000 to first time homebuyers of modest means who work in the service of our country’s defense. So go to this site to see if you qualify to be one of those who make home ownership a dream come true!
Dark Clouds Dissipating
Is the housing market finally starting to recover? Larry Shover, author of Trading Options in Turbulent Markets and a regular expert on Fox News says, “The sheer fact that median rental yields are more than 1.5% higher than the average 30-yr fixed rate mortgage should help support property prices.” People are starting to invest in housing again, whether they are buying it for a family home or as investment property to rent. So now can be a very good time to buy if you plan on keep the home at least three years or if you live in an area where you have the potential to rent out the home when you PCS.
Christine Francis, military spouse of a retired Marine and a current realtor in the Camp Pendleton area says, “ Now is definitely the time to buy because the interest rates are at an all time low. Sometimes military families can get into a home for only a $500 deposit. My agency has been able to get that $500 back by using a VA loan and financing the total amount. When the sellers are paying closing costs, many of my military clients are getting into their new homes for zero down.”
The Perfect Storm : Unemployment and Underemployment
The primary problem that could potentially ruin your sunny days is unemployment, which is expected to remain well above 8% for the rest of the year. If you are active military and plan on staying in the military, then this would not have a great impact unless you depend on the spousal employment to meet the mortgage obligation. However, if you are a Guard or Reserve family or if you are active and plan to separate and find a new job near the house you just purchased, then unemployment is something to take into consideration. The same is true for underemployment: if you don’t get the salary you need to meet your monthly payments. If either of these conditions are on your horizon, then it becomes a riskier endeavor to take the plunge in the housing market.
Clearing Skies –Interest rates and VA Loans
According to VA data, there are 23.8 million U.S. Veterans and less than 10 percent of them—2.1 million—have VA loans. “A VA loan is very attractive to most mortgage brokers,” says a representative from USAA home mortgages specializing in U.S. Department of VA loans. He adds, “VA loans have looser underwriting standards than conventional and even Federal Housing Administration (FHA) loans. With a VA loan, veterans can get 100 percent financing without private mortgage insurance (PMI) and lower interest rates.” Plus, you can get up to $3100 when you buy and sell your home through MoversAdvantage with USAA.
Christine Francis says her clients have been getting 3.75% interest rates on VA loans. The other advantage is that sellers are allowed to cover all closing costs, prepaid items and discounts. This lets borrowers essentially walk into their new home with no down payment, no closing costs and a 30 year fixed rate with no mortgage insurance.
Sunny Days – Housing Inventories
In many parts of the country, home prices are so far below their peak that millions of homeowners owe more on their homes than they’re worth. This means that prices are continuing to drop, and may have even bottomed out according to Moody’s Economy.com. Consequently, it continues to be a buyer’s market in terms of value. Christine Francis says, “Without a crystal ball, it’s hard to tell [where house prices are trending], but I do believe that we are at the bottom of housing prices and the only place we can go is up.”
Plus, with values expected to rise even more toward the end of 2013, the home you buy low, is likely to increase in value almost as soon as you close the deal.
See you at the book signing!
America’s Family Financial Expert (R)