Buying your first home is always exciting, but when you’re used to the outdated, old, and not-so-glamorous properties on military bases? The venture is even more exhilarating.
For the first time, you have full control over where you live, what your home looks like, and what your future holds. The possibilities are endless.
Still, as exciting as it all is, the process can also be a little overwhelming. Where do you start? How do VA loans work? How do you know how much you can afford? How will you go about managing your mortgage?
It might seem daunting, but buying a home is actually easier than it looks. Just use this handy guide, enlist the right partners, and you’ll be in that dream home in no time.
Where to Start
Your first step is to go ahead and get pre-approved for your VA home loan. As a military member (or former one), you’re entitled to a VA loan — essentially a mortgage designed just for service members like yourself, guaranteed by the Veterans Administration. VA loans come with a variety of huge benefits, ranging from lower mortgage rates and bigger loan limits to savings on your down payment and closing costs. Often, VA loans allow you to waive the down payment requirement altogether.
To get preapproved for VA loans, you’ll need to submit some paperwork about your income and debts to a mortgage lender, who will then evaluate your viability as a borrower. Once they’ve gone over your documents, the lender will pre-approve you for a loan and give you a maximum amount they’re willing to loan you. You can use this number to guide you toward appropriately priced homes within your budget. You may also want to experiment with this Embrace Home Loans calculator which can show you possible mortgage payments, depending on how you adjust different numbers.
Buying Your Dream Home
Next, you’ll want to enlist a real estate agent — ideally one who’s familiar with military clients and their unique needs. They’ll be able to help you find housing that’s within your budget and close to your base, and they may even know some areas where other fellow military families live as well. Make sure to give your agent your pre-approval letter, so they 1) know your lending limit and 2) can use it as a negotiating tool when bidding on homes. (In today’s hot market, a pre-approval letter can help you stand out from other buyers in a big way.)
If you’re still in the military and receiving a BAH (basic housing allowance), you’ll want to keep this in mind as you search for a home. Finding a home that will have a lower monthly mortgage payment than your BAH could free up some funds for other household expenses — things like utilities, lawn maintenance, etc. Having extra cash on hand is crucial as a new homeowner and can help cover the costs of moving, new furniture, and any painting or DIY projects you might have in mind.
Once you’ve found the home you like, your agent will help you negotiate the price, put in an offer, and solidify the contract. You’ll then finalize all the paperwork and documentation with your mortgage lender, who will get to work on funding your VA loan. Make sure to stay in touch with your loan officer during this time, as they may need additional documents to get your loan funded.
When all is said and done, you’ll attend your closing, sign the papers, and the home will be yours. You’ll get your keys and be free to move in!
Managing Your Mortgage
As you get close to closing, you might want to talk to your lender about using an escrow account, which allows you to lump your mortgage payment, property taxes, private mortgage insurance and other homeownership costs into one single account. This makes it easier to manage payments on a monthly basis — particularly if you’re not used to having a number of large housing payments to keep track of.
You’ll also want to sit down with your spouse or significant other to hammer out a monthly budget. Aside from your escrow or mortgage payment, homes come with a variety of other maintenance expenses you’ll need to cover each month, and you’ll also want to have some funds available should something break or need replacing.
A great way to stay on top of your mortgage is to use your bank’s auto-payments tool. Simply set up a recurring payment to your mortgage lender on the last day of every month, and let your bank do the rest. This will prevent any late payments or fees if you get busy or forget.
Buying a home for the first time can be daunting, but don’t let it overwhelm you. At Embrace Home Loans, we’ve helped hundreds of military members just like you, and we’re here to help guide you through the process. Contact an Embrace loan officer for help or get started on your VA guaranteed home loan application today.