Last Updated on February 8, 2023 by Bob Filipczak
If you are a military first time home buyer, it can be difficult to know where to begin. Should you start searching online listings, or call a real estate agent, or start watching HGTV or investigate mortgage options? The good news is: you don’t have to know everything about this entire process, and some of the resources
We are going to try to help you get that basic understanding – to know how to ask the right questions – so your first meeting with a real estate agent will be the beginning of a great relationship. That’s why we at Homes for Heroes stress the importance of landing a real estate agent for your journey. That’s why it’s our first tip. They are the experts. Let them guide you. And if you come to the table with a basic understanding of the first time home buying experience, they will be able to take you the rest of the way to finding the right home at the right price. Of course, affording your first home is also a big challenge, so we will look at ways to save money as you go.
5 Tips for the Military First Time Home Buyer
In the interest of creating a manageable list for you, we are going to present only five tips so you can begin the home buying journey. Are there more? Yes, but this is the executive summary of things you should know and think about when you begin the first home buying journey.
1) Find a Real Estate Specialist
We’ve said it once, but we can’t stress this enough. A real estate agent is your trail guide, your counselor, your consultant, your friend, your expert, your advisor and your cheerleader – all during different phases of the real estate process. With an agent you will feel much less alone and much less vulnerable to the winds of the real estate market.
That’s why we pair you with a real estate specialist right off the bat. Once you sign up to speak with our local specialists, we connect you to a real estate agent who is committed to helping you pursue home ownership. They have joined our network to assist heroes like you and save you some money in the process.
Homes for Heroes also connects you with our local mortgage specialist to work on your mortgage application, pre-approval and financing process. Our mortgage specialist saves you money by reducing their lender fees. The average amount saved on these fees is around $500.
After working with our real estate and mortgage specialists to close on a new home, Homes for Heroes will send you a check. The average amount saved by the heroes we assist is $3,000 that can be used toward furnishing your new home, buying appliances, or maybe help fund some touch up projects or minor renovations.
2) Organize and Summarize Your Finances
As a military first time home buyer, before you start looking, you might want to take a look at what you can afford. That doesn’t mean having a vague notion of what you can afford, it means getting out some paper or a spreadsheet and listing your income, your debts, your expenses, your rent, your credit score – essentially your financial life.
If you need help with that, you can use the Homes for Heroes mortgage calculator. It will help you figure out what the mortgage brokers call PITI. Principal, Interest, Tax and Insurance. Those are the four factors that will make up your monthly payment.
At this point, you should meet with a mortgage broker who will help you learn what you can likely receive as a mortgage loan to use toward a home. We recommend one of our Homes for Heroes mortgage specialists. Simply sign up to speak with our mortgage specialist in your area. They will help answer your questions about your budget and then discuss the home loan you can realistically afford. That means taking into consideration your taxes, medical insurance, utilities, grocery bills, and more.
Having a complete monthly budget is important, and you can build your own by downloading this monthly budget planner.
3) Pre-Approval is Your Competitive Advantage
Meeting with the mortgage lender may also involve a discussion about getting pre-approved. When you go into the housing market, pre-approval is one way to make the experience streamlined and less frustrating.
With pre-approval, you can make an offer on a home quickly with the help of your real estate specialist. Being pre-approved for a mortgage tells sellers that your lender agrees that you can afford a certain price point for a home. The process is quite involved and you will need to answer a lot of questions and provide considerable documentation. It comes with a pre-approval letter. The whole pre-approval package is your competitive advantage in a volatile housing market.
Being pre-qualified for a loan is a bit different. The process does not involve as deep a dive into your finances, so it doesn’t have quite the same weight as a pre-approval. In a very competitive housing market, pre-approval makes more sense.
It’s good to remember that pre-approval is only good for 90-120 days, so try to get pre-approved right before you start house hunting.
4) Must-Haves vs. Nice-to-Have
Once you get clear on money and finances, you get to investigate the kind of house you want.
Start by using our house hunting checklist and define your:
You will see things in the houses you visit that you didn’t even think of, and jotting these items on your checklist will be helpful later when you go back to reference something.
Now print out a few copies of the checklist and attach them to a clipboard. Granted, paper and clipboards are rather analog, but when you are out on a house hunt, you may have to get primitive. You don’t want to say “Siri, I need an insulated garage door” and have her accidentally order one for you on Amazon.
5) Look Online and Offline
Online listings are a double-edged sword. Trying to do your search without them would be crazy. Online helps decision-making in ways we don’t always appreciate. On the other hand, it can be overwhelming. If you use it as one of many tools in your search, however, it can help you concentrate on the properties you want to see in real life.
Once you have narrowed down your choices, it will be time to visit a prospective home. This visit – ideally during an open house – will show aspects of the house, and neighborhood, that can’t be communicated online. For example, is the 3-stall garage only big enough to fit two Fiats and a motorcycle or can you put your truck in there?
When you go out, make sure you have:
- Your clipboard
- Multiple copies of your checklist and a pen for notes
- A tape measure
- A flashlight
- A copy of your pre-approval letter
- A list of questions you had after seeing it online
House hunting can be fun, but it’s also emotional. You can get distracted by the possibilities. When it’s your first home, the emotions around decision-making can be turned up to eleven. Don’t be afraid to fall in love with something, but make sure you listen to your spouse, your family, or your real estate specialist if they see red flags with the property or the price.
Three Ways to Save on a Home
As a military first time home buyer looking for military home buying programs, affordability is always on your mind. It’s important to remember: there is help out there.
1) Homes for Heroes Provides $3,000 Average Savings
Our program is designed to say thank you to the military home buyer. We’ve been at it for 20 years, and we have learned a lot. Our process is designed to help a first-time homebuyer military service member, and military veterans, navigate the real estate world with confidence.
There are three steps to our process:
- We will pair you with a Homes for Heroes real estate specialist.
- We will pair you with a Homes for Heroes mortgage specialist.
- We will give you a Hero Reward® check after you close with our specialists. The average amount received by heroes we assist is $3,000.
Our heroes use the money they receive for appliances, repairs, renovations, or other projects after they close on their first house.
“Overall great experience. I was able to use the Homes for Heroes program along with my VA Loan and purchased the home of my dreams. The Homes for Heroes real estate agent was phenomenal and I couldn’t be happier. Thank you!” – Stephen, Navy, bought a new house in Texas.
If you are looking to purchase your first home and you are either active or retired military, don’t hesitate to simply sign up to speak with our local specialists. They would be honored to assist you with your questions, the home buying process and save you significant money.
2) VA Loans for a Military First Time Home Buyer
As a military first time home buyer, you have probably heard a lot about the VA loan program. The U.S. Department of Veterans Affairs provides loan guarantees for current service members and eligible veterans or eligible surviving spouses. Loan guarantees mean that the VA home loan program will insure your loan and then a private bank or mortgage broker will lend you the actual money based on that guarantee. Here are the military benefits for buying a house using the VA Loan:
- Your loan will have below market interest rates.
- You will have no down payment (or very low depending on the price range of the home).
- You won’t need private mortgage insurance.
- There is a cap on your maximum closing costs.
- The program does not have a minimum credit score requirement (however, many lenders will have a minimum credit requirement).
- There is no penalty for paying your mortgage off early.
- You do not have to be a first-time home buyer to use VA military mortgage loans.
- It’s a lifetime benefit – you can reuse it.
- VA home loans are assumable.
- The benefit can be extended to the military spouses and families of soldiers killed in the line of duty.
This is a very popular loan guarantee for a military first time home buyer, especially when compared to traditional loans in a competitive housing market.
3) FHA Loans
Military first time home buyers should know about FHA loans. Similar to VA loans, these loans are insured by the federal government (the Federal Housing Administration) and have very low down payment (down to 3.5%) when your loan is for your primary residence. And like the VA loans, the guarantee from a government agency gives your mortgage company the confidence to lower the down payment for military first-time home buyers.
You do not need to be a military professional or veteran to qualify for an FHA loans, but you do need:
- A credit score above 580 – you can actually get one if your credit score is as low as 500, but then your down payment will be 10%, not 3.5%.
- Proof of steady employment
- A history of honoring debts with a good credit history
- Proof you have sufficient income
The FHA does want first time homebuyers to have private mortgage insurance (PMI). However for FHA loans It is referred to as a mortgage insurance premium (MIL) for the loan.
VA loans vs. FHA loans
When you weigh the benefits of a VA loan against a FHA loan, the better option for a military first time home buyer is pretty clear. The savings and lower payments you would get through the VA home loan process includes your down payment, your mortgage insurance, your closing costs and your interest rates. With FHA you mostly just get a low down payment and some reduction in your mortgage insurance costs.
For active-duty service members and military veterans who are first time home buyers, the VA home mortgage is the best option, with the FHA being your back-up choice.
Helping military service members find and buy their first home is especially inspiring for our Home for Heroes real estate and mortgage specialists. They get to be there at the beginning of the American dream for a family. And for every military hero we help, we know there are ten more out there who could benefit from our Hero Rewards, our counseling, our lending experts, and real estate professionals who make up our team.
Military First Time Home Buyer Saves with Homes for Heroes
If you’re a military first time home buyer and you’re ready to begin the home buying process, Homes for Heroes and our local specialists are ready to assist. When heroes work with our local affiliates to buy, sell, both buy and sell a home, or to refinance a mortgage they receive an average of $3,000 given back after closing.
Take a moment to sign up today and speak with our local specialists. Get your questions answered and be on your way to a new home and save good money too. It’s our way to say, thank you for your service to the community and our country.