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Mortgages

I’m a servicemember or veteran and am considering buying a home. What do I need to take into account?

The first step is to be sure that you can afford to buy a home and in what price range. If you are on active duty, make an appointment to see a financial counselor at your local installation’s Personal Financial Management Program (PFMP). Find your nearest 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 sites Military One Source and Military Home Front, and the U.S. Department of Housing and Urban Development (HUD).

When calculating how much 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 fluctuations in home values and interest rates, especially if you expect to move or are considering an adjustable rate mortgage (ARM). Also, keep in mind that the cost of homeownership includes payments for homeowner’s insurance, property taxes, utilities, and maintenance, and repairs that you may not have faced when living in on-base or leased housing.

Be sure to check your credit report and credit score information to ensure that an error doesn’t deprive you of the best interest rate that you could qualify for on a mortgage. Although a difference of one percent on a mortgage rate may not seem like much, it can add up to thousands of dollars in the long term.

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. Be wary of credit repair scams that promise to improve your credit score for a fee. Consult your PFMP counselor or the free FINRA program instead.

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.

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