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Mortgages

I’m a military servicemember or veteran and am considering buying a home. What should I think about before taking out a mortgage?

If you're a veteran or an active duty member of the Army, Navy, Air Force, Marines or Coast Guard, there are two steps you should take right away when you consider buying a house:

1. Figure out what you can afford

The first step is to be sure that you can afford to buy a home and in what price range.

Tip: If you're on active duty, make an appointment to see a financial counselor at your local installation’s Personal Financial Management Program (PFMP). You can find the the closest PFMP office online – select “Personal Financial Management Services” in the “Program or Service” drop-down box.

Additional resources that can help you make this complex decision are the U.S. Department of Defense-endorsed site Military One Source and the U.S. Department of Housing and Urban Development (HUD).

Tip: When deciding how much house you can afford, don’t forget to consider future changes in your income or obligations that might be triggered by children, retirement or transition from the military, or a change in your spouse’s employment status.

You should also take into account potential changes in home values, especially if you expect to move. You should also consider how your interest rate and payment could change over time, if you're considering an adjustable rate mortgage (ARM). Keep in mind that the cost of owning a home includes payments for:

  • Homeowner’s insurance
  • Property taxes
  • Utilities
  • Maintenance
  • Repairs that you may not have faced when living in on-base or leased housing

Changes in the real estate market are hard to predict, so think carefully about purchasing a home if you expect to be in the area for only three to five years or less. A downturn in the real estate market may make it hard for you to sell, rent or even refinance the home if you are obligated to move away.

2. Check your credit

Be sure to check your credit report information to make sure an error won't stop you from getting the best interest rate that you can get. Although a difference of one percent on a mortgage rate may not seem like much, it can add up to tens of thousands of dollars in the long term.

Tip: As a servicemember, you may be able to access not just your credit report but also your credit score for free, along with free financial education and counseling, through the PFMP office. If you are deployed, your first resource is your chain-of-command, who should be able to direct you to the servicing Personal Financial Manager (PFM) in your situation.

In isolated cases where you are not provided access to a PFM, your credit report and score may be obtained by contacting the Financial Industry Regulatory Authority (FINRA) Investor Education Foundation by emailing creditscore@finra.org.

Warning: Be wary of credit repair scams that promise to improve your credit score for a fee. Consult your PFMP counselor instead.

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