Buying a home for the first time can be daunting. And for a veteran, the process can be especially intimidating. After years or even decades of service, transitioning into a civilian lifestyle will require serious adjustments. But when you’re ready to look into purchasing a home, your mortgage broker should walk you through the steps of obtaining a loan. The homebuying process is actually much simpler and comes with more perks and benefits for the veteran homebuyer than for non-veterans. But before you consider taking your first step, we’ve come up with a list of five tips for first-time veteran homebuyer.
1. Determine your priorities when paying off debt.
This first tip may seem unrelated to purchasing a home, but the truth is you should start the homebuying process as debt-free as possible. A good rule of thumb is to pay off debt that isn’t securitized by collateral. Debt from collateral such as vehicles or property is preferred over credit card debt, and so it’s better to pay off the credit cards first. In addition, before you apply for a loan, examine your credit report and check for errors. A 2013 report published by the Federal Trade Commission (FTC) “found that five percent of consumers had errors on one of their three major credit reports.” Before applying for a mortgage loan, obtain your free credit report from the FTC and beware of fraudulent websites.
2. Purchase a home with the intent of making it an investment.
Maybe you’re not sure why you should consider purchasing a home; in the future you might decide to go back into service or even relocate. But a first-time veteran homebuyer needs to view purchasing a home as an investment. You may decide to resell the home or offer it up for rent for the time you are away. Choose a more popular home style and size to sell quicker or find tenants. Before starting the process of securing a loan, stay aware of all costs associated with buying a home such as paying for a home appraisal and inspection. Also take into account other personal expenses such as life, medical, and dental insurance. In the long run, a home will be a smart investment.
3. Show steady employment over a two-year period.
Before purchasing a home, lenders need to see a history of stable employment for at least two years. You may still be able to secure financing if you have less than two years of employment, but the loan specialist will take a much more detailed look. Also, avoid a job or career change. Having two years of continuous employment is golden.
4. Choose a realtor and lender who understand VA loans.
As a veteran homebuyer, you qualify for VA loan options that have lower rates than standard mortgage loans. A realtor should help you find a home that meets the minimum property requirements and a lender will guide you in securing a VA loan. For more information on obtaining a VA home loan, visit the U.S. Department of Veteran Affairs website.
5. Beware of opening another line of credit after your loan is approved.
Buying a home for the first time is exciting! And this excitement can lead to big purchases such as furniture or a new car. But all homebuyers should beware of making big purchases before escrow closes or opening another line of credit after your loan is approved is a big no-no. A big purchase can alter your credit score and even disqualify you from securing the loan.
What’s next for a Veteran Homebuyer?
These are only a few tips we can offer for the first-time veteran homebuyer. If you have any additional questions, feel free to leave a comment or call Beau Hodson for personalized expert advice. We would be honored to guide a veteran homebuyer down the home-buying journey!