Servicemembers: 5 Ways to Protect Your Home
By Laura Roler, Military Saves Associate, AFC® Candidate, FINRA Military Spouse Fellow
There are a number of concerns that all homeowners share such as mortgage payments, upkeep, and handling emergencies. Military homeowners are no different, but they must also worry about deployments, frequent PCS moves, and managing their homes and mortgages from a distance. If you are considering a home purchase, or already own a home, make sure you take the right steps to protect the most expensive purchase you may ever make.
#1: Be prepared before you buy
A mortgage can be a boon or bust to your finances. Aim to keep things positive and prepare yourself for a home before you buy:
- Evaluate the pros and cons of buying vs. renting. Consider the timing of your next PCS move, your next deployment, as well as other requirements and costs of home ownership.
- Save for a down payment. While it may be possible for you to obtain a zero-down mortgage, there are some worthwhile advantages to making a down payment.
- Don't borrow more than you can afford. Find out how much you can afford with this online calculator.
- Interest rates matter! So do points and other fees that are added on during the home buying process.
#2: Grow your emergency fund
At the time that you purchase your home, your finances are likely stable, if not in great shape. However, things can change fast - loss of income, medical emergencies, natural disasters, or car repairs can wipe out your monthly budget if you haven't put money aside. Instead of risking the roof over your head by missing mortgage payments, create or add to an emergency fund to help you pay for the unexpected, stay on track with your bills, and avoid taking on costly credit card debt or payday loans. In addition, that emergency fund can help you protect your investment. Pipes burst? Air conditioner dies? Use your emergency fund, not the money set aside for your mortgage payment.
#3: Insure your home
Homeowner's insurance is another way to protect yourself and your home from emergency costs. Though in most cases you are not legally required to be insured, your mortgage lender will likely require it. Even if your circumstances do not legally require you to insure your home, consider the alternative consequences of damage, theft, or other losses on your finances and your family. Mortgage payments won't stop if your home is destroyed or damaged in a fire or other event, and paying out-of-pocket to replace an entire household of furniture, appliances, and other possessions just isn't feasible for most homeowners. Don't risk going into debt to replace what you lose - get coverage for your home and your possessions and make sure the protection is there if and when you need it.
#4: If/when you have to move...
Be prepared for the likelihood that, at some point, you will either move or deploy as a military homeowner, and the mortgage payment is still due whether you live there or not! Consider the pros and cons of selling vs. renting, and ask yourself if you are prepared to be a landlord. If not, you have the options of selling, or holding on to the property unoccupied. Selling your home is not guaranteed, but keeping a home unoccupied still requires insurance, maintenance, and other costs on top of your mortgage payment. Carefully consider your situation and options to find the best solution for you and your family.
#5: Get help when you need it
If you ever find yourself unable to pay your mortgage, address the problem with your loan servicer as soon as possible. In addition, the following resources could be helpful in your efforts keep your home:
It is in your best interest to protect the investment you made when you purchased a home. Through careful preparation, planning, and action, you can successfully purchase and protect your home through the ups and downs of a military career.
- Category: Blog
- Published: 04 June 2015