Should we buy or rent our home? If you are an active military family, chances are this question has come up in discussion across the dinner table. While moving frequently based on Permanent Change of Station (PCS) orders may deter some from buying a home, the benefit of being a homeowner far outweighs the headaches and costs associated with being a renter.
With proper preparation, buying or building a new home for you and your family can be made a reality. Here are the top reasons why becoming a homeowner may be a better option for your family over renting in 2024:
Being a homeowner allows you to build a neighborhood network
If you opt to buy or build a home, chances are that you will quickly get to know your neighbors and members of your community. Forming connections with those who live nearby can be very important to your spouse and your children. If you are renting, you probably see neighbors moving in and out periodically, you don’t have much flexibility in terms of pet policies or common area rules, and your rent payments are ultimately at the discretion of your landlord.
Being a homeowner means that you are in control, you have the freedom to have pets or a playset in your backyard, and you create the rules for how you live.
Renting is costly, and these costs will only rise over time
One key benefit of purchasing a home in the military lies in the potential for substantial long-term savings. Although renting may appear more affordable at first, rental costs typically rise annually due to inflation and heightened demand. In contrast, monthly mortgage and interest payments remain consistent as long as they’re made punctually and in full.
Below is an example of how monthly rent payments compare to monthly mortgage payments over time:
*The above table assumes a 5% annual rent increase, while mortgage payments remain constant
While renting, you will likely continue to see increased rent prices throughout your time at the property. While homeownership may seem like a bigger upfront cost, it is an investment that will likely save you money in the future, where renting will not.
Purchasing a home boosts your credit & equity
Opting to rent rather than buy means missing out on valuable opportunities to enhance two crucial financial aspects: your credit score and equity.
Homeownership has the potential to bolster your credit score gradually, serving as an indicator of your good financial management. Consistently meeting mortgage payments in a timely manner demonstrates to lenders and credit bureaus your reliability as a borrower, fostering a positive credit history.
Equity represents the difference between your home’s value and your outstanding mortgage balance. As you fulfill mortgage obligations and your property appreciates, your equity grows. This accrued equity can later be leveraged for financial purposes, such as educational funding, entrepreneurial ventures, or unforeseen expenses.
Renting fails to provide the avenues for credit and equity development intrinsic to homeownership. Typically, rent payments do not contribute to bolstering your credit score, as they are not regularly reported to credit bureaus unless facilitated through a specialized rent-reporting service. Additionally, renters do not accumulate equity, as they essentially remit payments to occupy a property without gaining ownership.
Being a homeowner provides freedom and flexibility for your family
Purchasing a home in the military gives you control over your living environment, enabling modifications or enhancements to align with your requirements and tastes. Whether through renovations, landscaping, or interior decoration, you can personalize your home to reflect your preferences.
Beyond customization, the ability to personalize your residence holds significant value. The liberty to upgrade your home and incorporate additions can substantially elevate its worth over time. Qualified service members may also leverage a VA renovation loan to purchase a home and receive funds for repairs. This level of authority and decision-making is typically absent in rental scenarios, thereby forfeiting the chance to enhance your home’s value.
VA Loans
If you’re eligible for a VA loan, purchasing a home can be simplified. Often times, VA loans do not require a down payment, allowing active military members and veterans to make being a homeowner a reality, without the added stress of coordinating finances to come up with the often hefty required downpayment needed to purchase a home. If you are renting, VA loans are out of the equation, as this benefit is not offered to reimburse or cover any costs associated with renting your home.
You can verify your VA loan eligibility here.
VA Loans have built-in PCS protections
A PCS order coming in may be the biggest deterrent for active military families wanting to purchase a home. However, with the VA loan approval, your family is protected under the terms of the agreement that prevent any consequences from loan prepayment penalties or occupancy requirements.
Typically, borrowers may encounter loan prepayment penalties when settling their loans ahead of schedule. However, VA loans differ as they waive such penalties altogether. This allows borrowers the freedom to settle their mortgages prematurely or make supplementary payments without incurring extra charges. As long as you clear the principal amount along with accrued interest, you can sidestep any repercussions and completely reinstate your VA loan entitlement.
Another challenge arises with VA loan borrowers needing to fulfill occupancy criteria. Usually, this entails relocating to the property within 60 days of a set date and residing there as the primary residence for a minimum of 12 months. Nevertheless, if you’re issued a PCS order and are married, your spouse can fulfill these criteria on your behalf. Single service members or individuals living alone may be exempted if they had the genuine intention to inhabit the property before being relocated.
The security and stability of being a homeowner far outweigh the temporary flexibility provided by renting. Owning a home has the potential to enhance both your credit score and home equity, affording you greater financial leverage down the line. The capacity to personalize your property not only grants you the chance to boost its value but also fosters a sense of tranquility and contentment for yourself and your family.
Maronda Homes has been a family-owned and operated business for over five decades. In that time we have dedicated ourselves to building quality new homes at an affordable price, with unparalleled attention to customer service.
Ready to build your dream home? We’re excited for you to call a Maronda home your own.