Preparing to Purchase a Home

By Meghan Gardner, AFC®, FFC™ Candidate

A house is most likely the largest purchase you will ever make. Whether you are buying a home to be the perfect space for your family until your next PCS or the perfect forever space after retirement, a home purchase can be exciting yet stressful. There are a few things that you can do to help take some of the stress away from your move and prepare yourself to buy your new home.

Work on improving your credit.

  • Download or order a free copy of your credit report. Thoroughly review it to look for errors. Incorrectly reported items should be disputed with the lender in question, as well as the three credit bureaus. Provide as much information as possible regarding the error when submitting your dispute; the more information you are able to provide, the more easily it can be resolved.
  • Understand the components of a credit score and the impact they have. Avoid applying for more credit until you submit your mortgage application, and consider the amount of credit card debt you carry. Think about the credit card balance versus the credit limit; try to pay it down to 30 percent or less.
    • To calculate this, take the balance divided by the limit. Multiply by 100 to see what percentage you are currently carrying.
  • Know your credit score. The best way that you can get a free FICO score is to take the Military Saves Pledge, visit your installation's Family Readiness Center, or call Military OneSource.

Create a spending plan.

  • Consider what your income will be after you move. The BAH rate may change if you are PCSing to a new duty station or have had a change in rank. If you are transitioning out of the military, keep in mind that BAH will not be provided anymore.
  • Be realistic about the cost of mortgage payments, utility costs, and overall cost of living in the area you will be residing. Every expense should be accounted for.

Establish a savings account.

  • Treat savings like an expense on your spending plan. This helps you to follow the idea of paying yourself first.
  • Make saving automatic. Using myPay, you can set up an allotment from your pay into a savings account or you can have an automatic transfer set up to send money from your checking account to your savings account.
  • Remind yourself you are saving for a house down-payment, closing costs, or for emergency home repairs. Each is vital to successful homeownership.

Consider your VA benefits.

  • Find out if you are eligible to receive a COE based on your service.
  • To receive a VA Home Loan Guarantee, be prepared to show proof of sufficient income, suitable credit, and a COE.
  • Even if this is not your first home purchase using a VA Loan, your eligibility may be restored through the sale of the previous home, paying the loan in full, or transferring the loan to a qualified veteran.

Although a home is a very large purchase that comes in many steps, military families have many resources to assist them. There are Financial Counselors available at Family Readiness Centers, as well as Military OneSource. Veterans, members of the Guard and Reserves who are not on active orders, and members of the Coast Guard can visit a CFPB Financial Coach. For housing specific information in your local area, you may also visit a housing counselor. No matter where you are located, there is someone to assist in making your goal of homeownership become a reality.  

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    33% of Americans spend more than they earn. The first step to eliminating #debt is to stop borrowing & make a budget.

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