Veterans Can Start Building Wealth

         In the current economic downturn, veterans and active duty personnel have an excellent opportunity to secure their financial futures.  With the value of homes depressed to near record levels and with lenders’ increasingly stringent approval criteria, now is the time for those potential buyers who qualify for VA loans to make their move. 

Sellers are anxious to unload their properties, and many conventional buyers can no longer qualify for the mortgages needed to purchase these homes.  As the only program left that provides 100% financing without having to overextend a borrower, the VA loan program is a tremendous benefit to our local service members.  The VA loan program’s other highlights include seller-paid closing costs plus 4% of the sales price that the seller can provide to buy down the rate.  Also, a VA mortgage does not require private mortgage insurance, which can add hundreds of dollars to one’s monthly housing payment.

            Understandably, it may seem like a tough decision to make the move from base housing or local rentals to a mortgaged home, but the benefits of becoming a homeowner outweigh the comfort of the status quo.  The BAH rate for an E-1 through E-4 with dependents is $1080 per month, so what does this amount equate to? 

First, if the service member is lucky enough to make it through the long waiting list for base housing, they can get a 3 bedroom, 2 bath row home with a modest floor plan and a 1 car garage.  They could also rent a 3 bedroom, 2 bath apartment with no garage for the same amount.  Lastly, the veteran could opt to purchase a home.  A monthly housing payment of $1080 equates to a home in the $155,000 to $160,000 range.

            What kind of house can one get in that range?  A quick search on Realtor.com shows that one could buy a house with 3 bedrooms, 2 baths, a kitchen twice as big as those in base housing, a full basement, hardwood floors, etc. all on a full acre of land for $155,500. 

Not only is purchasing a house better in terms of living space, but each mortgage payment made is like depositing money into a savings account.  Each month, a homeowner’s equity builds.  Over time, this means that all of those monthly payments counted for something… ownership.  Years and years of rent leaves a renter with nothing more than what they started with.  All of that rent, or BAH signed over to base housing could have been put to better financial use.

It cannot be emphasized enough that now is the prime time for veterans to take advantage of their VA loan benefits.  The economy is like waves in the ocean.  The low that we are now experiencing will most definitely transform into another high at some point in the future.  The window of opportunity gets a little smaller every day for these veterans to make a tremendous move towards securing their families’ futures.