Should Active Duty Military Buy a Home
There are many loan options for military families when it comes to buying a house. VA Home Loans have made homeownership an affordable opportunity for active duty military members. However, many people question whether or not they should buy a house given their unique circumstances. Let’s analyze whether or not active duty military should buy a home.
Benefits of Buying a Home:
Basic Allowance for Housing
Each month military members who do not reside in military housing receive a basic allow for housing. It is money that is non-taxable and is calculated based on the cost of living in the area they are stationed in. One benefit of buying a home is that they are using tax free income to start building equity in home. Typically a mortgage payment will be less than the housing allowance for the area, and cheaper than renting a home. This will help the family save additional money.
The Overall Economy
The economy of the country is strengthened by military home owners. Active duty military members make up 1% of the United States population. If all active duty military members topped buying houses it would have a big impact on our housing market and economic climate.
Avoiding Inflation
Another benefit of buying a home while being active duty military is avoiding the inflation of the housing market over the years. If ever military member waited until they retired to buy a house, they’d pay a significantly higher price on the home than if they bought 10-15 years prior. Buying while still in active duty service allows military members to enter into the housing market when their generation typically would and build equity over the years.
Making a Profit on the Sale of a Home
If a military family buys a home and sells it several years later they may make a large profit on a home. This profit can help fund their children’s college education or their own retirement. If they never bought the house they would miss a great opportunity of the return on investment of homeownership.
Risks of Buying a Home:
Transient Lifestyle
Most military families receive orders to move to a new area every 3-4 years. This adds a whole new element of risk to owning a home for military families. It can be very costly to buy and sell a home every 3-4 years. Military families will need to assess the housing market and the mortgage rates to see if buying is affordable for their situation.
Being Unable to Sell or Rent Their Home
If a military family has already bought a house and they have orders to move to a new location they must either rent or sell their home. This becomes risky if the housing market isn’t strong and they can’t sell the house. Additionally, if they decide to rent the home they will need to find renters quickly or the existing mortgage payment can jeopardize their personal finances.
Dropping Property Values
The housing market can be volatile and has peaks and valleys. Active duty military will want to buy a home during a valley in prices and sell during a peak, but it doesn’t always work out this way. If property values drop when a military family needs to sell a house they are at risk for losing several thousand dollars.
Being a Long Distance Landlord
If a military family decides to rent out their home after moving to a new duty station they take on the new risk of being long distance landlords. Most likely the home is located in a place where they don’t have anyone to look after it, and it can be costly to hire a property management company to look after the property. They also run the risk of the property being trashed and having to travel to do repairs or maintenance on the property.
There are many arguments as to whether or not active duty military should buy a home. No two military families are the same, and there isn’t one answer as to whether it’s smart of active duty military to buy a home. Ultimately military members should carefully weigh the risks and benefits of homeownership and decide what works best for their unique situation.
