Owning a home has been a part of the American dream for a long time, but it’s never a good idea to buy a home if the time isn’t right. Home ownership can come with significant financial risk that has more negatives than positives when compared to military rentals. So, before considering a home purchase, think about the reasons why a rental may be the best financial decision you can make.
In most cases, military personnel transfer every three years; that’s a lot of moving. While there are a lot of factors that go into figuring how long it takes the average homeowner to break even on a house, most people would agree that it’s about five to seven years depending on the market. So, if you plan to purchase a home and sell it only three years later, you’d actually be losing money.
The military provides a housing allowance based on many factors, such as rental costs, utility expenses, and location. They do a good job at figuring out just how much it costs to rent in a certain area. When you purchase a home, those costs increase significantly because – in addition to a mortgage – you have to pay for homeowner’s insurance, property taxes, HOA fees, and repairs and upgrades along the way. All of these costs come in addition to a large down payment, unless you’re using a VA loan, which often has much higher fees than a traditional mortgage loan in the end. Also, the VA loan is only good for your primary residence, so you will be ineligible for getting another VA loan until the first home is paid off or sold.
If you move to a new area and find the best schools are somewhere you can’t afford to purchase, it can be much easier to rent in that school district. Your children can be in the school district you want without a commitment to a mortgage if you decide to rent.
The Costs of Selling
There’s no fee when you move out of a rental. On the other hand, selling a home can be costly as most realtors ask for six percent of the selling price. That’s $12,000 on a $200,000 home. If you buy and sell at each duty station, that adds up to a hefty amount of money over the long haul. The money you save by renting could be used to build up a larger retirement fund or be put towards a larger down payment when you leave or retire from the military.
Either Way, Stars & Stripes Has You Covered
While no two situations are the same, military rentals are often the best bet for military families. Rentals allow freedom to move from duty station to duty station without the hassle of selling a home or being a long-distance landlord. With the housing allowance the military offers, which covers most costs, renting is a great option for military personnel who move frequently and don’t want to incur additional costs. However, to be sure, for those who elect to purchase a home, Stars & Stripes Homes is still the military’s trusted choice.