Should You Rent or Buy While in the Military?

Deciding to join the military is a huge decision, one that requires much thought before taking on such a commitment. Once you’ve made the decision to join, there will be other areas of your life where you’ll face big decisions due to your transient lifestyle – such as whether you should buy or rent a home. There are several factors to consider, so we’ve broken them down to make it easier to digest!

Why would I want to buy?

You may be wondering why someone in the military would even consider purchasing a home, since the military can often require you to move about the country (and abroad) frequently. Not to mention, if you’re in it for the long haul, you could have quite a few home addresses under your belt by the time you retire. There’s a big reason you may want to consider buying, though – and it’s called the VA loan program.

A VA loan is a mortgage loan for service members that’s guaranteed by the U.S. Department of Veterans Affairs (VA). Its main purpose is to help Veterans finance a home purchase with favorable loan terms.

If you’re a military service member or Veteran, you may be eligible for a VA loan. And the great news is that many of the perks of this loan are unmatched by any other home loan option.

Consideration: buy vs. rent

Clearly, the (loan) terms are in your favor if you think buying a home is the best option for your situation. But there are still scenarios where renting might work for you. So how should you determine which route to take? Read on for some considerations that can help you make a sound decision.

Branch and job in the military

The branch of military you’re in and the job you hold can help you determine how often you’ll end up moving. It’s a common stereotype that all service members move every few years – but that actually varies widely across the different branches. For example, one person might face heavier travel requirements than others. Each person’s service is unique.

Length of time in a location

If you don’t foresee yourself being restationed every few years, you’ll probably find buying a home more favorable to your needs.

In fact, if you plan to stay in your home for five or more years, buying is typically viewed as a great option.

If you think you’ll be required to move sooner, renting might be a better option – unless you’re open to renting out your home when you relocate.

Deployments

Depending on the branch of military and your position, you may face frequent deployments. It may sound counter intuitive to want to purchase a home when you’ll be coming and going so often, but it can actually be to your benefit. Assuming you’re single, if you’re renting, you’re paying for a space you aren’t living in for certain periods of the year, think about how much money you can save. However, if you own a home, the mortgage payments you’re making are adding up in the form of equity in your home – and this is true no matter what your family situation looks like! If you have family, the stability of an owned home can bring peace of mind to your loved ones.

Reselling your home

As mentioned above, suppose you buy a home and several years later, will need to relocate elsewhere. Considering the fact that you didn’t have a down payment (what many consider a perk of the VA Loan – no down payment is needed!) and aren’t required to pay PMI (this loan doesn’t require a monthly mortgage insurance or a 20% down payment to avoid the PMI like Conventional loans), you could likely sell your home and potentially break even (if not make a profit). Just be aware that it may take some time to sell your home, depending on current real estate market conditions – so make sure you have enough money saved up to pay your mortgage until the home is sold while also paying to live in a second home elsewhere.

Becoming a landlord

You could also choose to maintain the home and rent it out – this could be a good option if you plan to return in the future or simply desire to own an investment property. Just make sure you’re up to the challenge of becoming a landlord – or are willing to hire a property management company to maintain the home in your absence. It’s also worth noting that in this scenario, you may be able to purchase a second home with a VA loan – so if you keep your home and rent it out, you could potentially also buy a new home in a new city. There are some specific requirements in order to do this, so just be sure you consult with a mortgage lender to see if it is an option for you to consider.