With today’s market, veterans and active duty personnel have an excellent opportunity to secure their financial futures. Property values are still relatively low but increasing around the country, and lenders are starting to loosen some of their qualification criteria. Now is the time for potential buyers who qualify for VA loans to make their move.
As the only program aside from the U.S. Department of Agriculture that provides 100 percent financing without having to overextend a borrower or tap out their savings, the VA loan program is a tremendous benefit to veterans, as well as local active-duty service members. The VA loan program’s other highlights include seller-paid closing costs plus up to 4 percent of the sales price that the seller can provide to cover other items. Also, a VA mortgage does not require private mortgage insurance, which can add hundreds of dollars to one’s monthly housing payment.
It may seem like a tough decision to make the move from base housing or local rentals to a mortgaged home, but the benefits of becoming a homeowner outweigh the comfort of the status quo. The current BAH rate for an E-1 through E-4 with dependents is $1,374 per month (as of May 2014), so what does this equate to?
First, if the service member is lucky enough to make it through the long waiting list for base housing, they can get a three-bedroom, two-bath row home with a modest floor plan and a one-car garage. They could also rent a three-bedroom, two-bath apartment with no garage for roughly the same amount in the local area. Lastly, the veteran could opt to purchase a home. A monthly housing payment of $1,374 equates to about a $235,000 home in today's local market with a 4.25 percent mortgage rate, including taxes and insurance. Properties currently listed in the $235,000 range in the Dover area are three- to five-bedroom, two- to three-bath homes on almost a half acre of land.
Not only is purchasing a house better in terms of living space, but each mortgage payment made is like depositing money into a savings account. Each month, a homeowner’s equity builds. Over time, this means that all of those monthly payments counted for something… ownership. Years and years of paying rent leaves a renter with nothing more than what they started with. All of that rent, or BAH signed over to base housing could have been put to better financial use.
It cannot be emphasized enough that now is the prime time for veterans to take advantage of their VA loan benefits. The economy is like waves in the ocean. The low now being experienced will most definitely transform into another high at some point in the future. The window of opportunity gets a little smaller everyday for these veterans to make a tremendous move toward securing their families’ futures.
Chad Moore is vice president of business development with The Mortgage Market of Delaware, a family-owned and operated brokerage since 2006. He is also a veteran of the U.S. Navy. More information is available at www.themortgagemarketofdelaware.com and Moore can be contacted directly at 302-236-9397.