Military home ownership: Your guide to resources, financing and more
Learn how to navigate the planning process, purchasing stage and more with these home buying tips for those in service.
Buying a home for the first time is an exciting process and big dreams can suddenly become a rewarding reality. Buyers have the chance to explore their preferred new neighborhood and envision themselves in a variety of different homes until they eventually find one that feels just right. But for those in the military, this process often looks slightly different, with unique challenges and nuances that can arise while touring, financing and purchasing a home.
Here, Julia Marie Claffey (NMLS# 1111509) and Amanda Wilson (NMLS# 1898362), U.S. Bank mortgage loan officers from Clarksville, Tenn., discuss some of the obstacles military personnel might encounter during the journey to home ownership and share advice on how to make the most of the process.
Unique challenges for military personnel
While owning a home can bring a huge sense of accomplishment, the process itself is often complex for people working in the military. “I think there’s definitely more challenges that you wouldn’t run into in your typical transaction with non-military borrowers,” says Amanda.
She explains that often, borrowers are deployed and working with power of attorney, or they’re undergoing a permanent change of station (PCS), moving between states. This means that they sometimes won’t have direct one-on-one conversations with their mortgage loan officer about the process, so everything is done remotely instead.
The good news is that there are solutions to this issue. “The bank is very good about working around this,” says Amanda. “Our online application is really great – between the mortgage loan officer and the online capabilities, everything can be done in a timely manner, with the majority of the steps being done online. Within the application [The buyer] can send us documents through a secure upload, and they can view and sign disclosures.”
Amanda adds that with the virtual platform available, members of the military can be closely involved in each step of the process, no matter where they are. “Even in a different country, [the borrower] is able to go through and be able to view the loan application process as if they were in the same town,” she says. “I think that really makes a difference.”
Tips for navigating the process
In addition to support from the bank, the online application and virtual technology, it’s helpful to keep in mind that assistance is accessible wherever you are. Being aware of the resources available to you and understanding your financial situation can play a big role in the buying process. Here are some suggestions from Julia and Amanda.
1. Utilize USO: The United Services Organization (USO)1 is stationed at more than 250 locations, offering programs, entertainment and services for military personnel. This organization can help connect buyers with realtor contacts and home buying information. “Pretty much anywhere you go, every base is going to have some form of USO on it, and the USO is going to be a great source of opportunities and resources for the local community – and they can provide helpful contacts for that area,” says Julia. The U.S. Bank location in Clarksville, Tenn., an area with many soldiers and retirees near the Ft. Campbell base, has partnered with USOs to offer financial education classes, for example. But you can find other local USO programs across the US.
2. Work with a mentor: Julia suggests working with your colleagues and partners to find out tips about the homeownership process, whether it’s to discuss finding a location, navigate the financial process or simply hearing others’ stories. “When you go to a new post, you have a mentor or contact – so utilizing them, and just asking questions for specific areas in the place you’re going is a great thing as well,” says Julia. You can also reach out to a mortgage loan officer at U.S. Bank who can also help you navigate the financial process while you’re deployed.
3. Understand your costs: When buying a home, there’s the obvious cost of the mortgage. But there are actually several significant costs buyers should be aware of. “There are three things that you’re looking at: your down payment, your closing cost and your prepaids. These items can be: homeowners insurance, mortgage interest, and property taxes that you pay when you buy a home. If you set up an escrow, you’ll make an initial payment at closing," says Amanda.
While Veterans Affairs loans can certainly be a helpful part of this process, it’s important to be clear about what is covered and have a plan for what is not. “I think there’s a little bit of a misunderstanding on a VA loan that there’s absolutely no cost to the borrower,” explains Amanda. “The VA loan covers the down payment, but it doesn’t necessarily cover those other costs.”
4. Don’t open new credit: It’s important to keep your financial focus on the qualification process and avoid unnecessary or expensive purchases. “When you’re in the home search process, do not open any new credit, and minimize large purchases, because anything you do could impact how much you qualify for,” says Julia. “Keep a steady budget and don’t get swayed by glitz and glamor.”
5. Get a preapproval letter: When it’s time to get serious about the search and touring homes, consider taking the optional step of getting preapproved so that you’re prepared to make an offer quickly if the right home becomes available. “Have a preapproval letter in hand before you start shopping, because you could walk into a house and absolutely love it, and not be preapproved,” says Amanda. “If it’s a house you’re absolutely in love with, chances are 10 other people are in love with it, too. You want to have that letter in hand so you can make an offer as fast as possible.”
Financial resources and programs available
U.S. Bank is also able to help connect customers with local programs that have the expertise to help facilitate the buying process. “We do Veterans Administration (VA) mortgage loans right now, and [in Tennessee] we partner with local community programs that can even help further assist VA buyers with closing costs and things of that nature through local programs,” says Julia. If you’re not in the state of Tennessee, reach out to your local U.S. Bank branch or visit usa.gov for general information and to find out what programs may be offered in your area.
Be sure to talk to your local branch or reach out to us online to get connected with relevant programs in your community as you embark on your home search. In the meantime, making a clear plan, checking your credit score, monitoring the market and saving in advance will help you feel prepared when it comes time to cover home costs. With an understanding of common obstacles and the variety of situations military members might be in, U.S. Bank is prepared to be of assistance and make sure the purchase process happens as smoothly as possible.
Looking for more financial tips for active duty and veteran military members and families? Here are some other things to know about managing your financial life during and after your service.
1U.S. Bank is not affiliated with the organizations mentioned in this publication unless otherwise notated.