Military Home Buying Tips
For Canadian Armed Forces (CAF) members looking to buy a home, there are several important factors and tips to consider.
Key Considerations for CAF Home Buyers:
Potential for Relocation: CAF members should be aware that they may need to change locations due to new postings, which can add stress to the home buying process.
Interest Rates: CAF members may be eligible for lower interest rates. However, interest rates can fluctuate and impact buying power, especially in expensive real estate markets. The qualifying rate for mortgages may also be higher than the actual mortgage rate, regardless of the down payment amount.
Financial Planning:
Debt Reduction: It is important to pay down debts before applying for a mortgage.
Savings: Saving money for a larger down payment can be beneficial.
Pre-Approval: Getting pre-approved for a mortgage helps understand how much can be afforded and can be a competitive advantage in a volatile housing market. Pre-approval involves a detailed review of finances and provides a pre-approval letter.
Credit Check: It’s also wise to go through the credit-check process ahead of time to resolve any potential issues.
Budgeting: Create a detailed monthly budget including income, debts, expenses, rent, and credit score. A mortgage calculator can help to understand Principal, Interest, Tax, and Insurance (PITI) which make up your monthly payments.
Flexibility: Being open to different property types and locations can open up more options, especially in expensive areas. This may include considering starter homes or properties outside of the city.
Professional Guidance:
Real Estate Agents: It is helpful to find a real estate agent who is familiar with military relocations. Some real estate specialists are committed to helping military members and can save them money in the process.
Mortgage Brokers: It is beneficial to work with a mortgage broker who understands the unique needs of CAF members and can assist with the mortgage application, pre-approval, and financing process.
Other Professionals: It is beneficial to find military approved real estate agents, home inspectors, and other real estate professionals who understand the unique situations of those serving in the military.
Steps to Take When Buying a Home:
Find a Real Estate Specialist: A real estate agent can be a trail guide, counselor, consultant, and advisor throughout the process.
Organize Finances: List all income, debts, and expenses to understand what you can afford.
Get Pre-Approved: Pre-approval can help you make offers quickly, and shows sellers that a lender agrees you can afford a certain price.
Define “Must-Haves” vs. “Nice-to-Haves”: Create a checklist for the kind of house you want.
Research Online and Offline: Use online listings as one of many tools in your search, and visit homes in person to assess aspects that cannot be communicated online. Bring a clipboard, checklist, pen, tape measure, flashlight, pre-approval letter, and a list of questions when visiting potential homes.
Financial Assistance and Savings Programs:
Homes for Heroes: This program pairs military members with real estate and mortgage specialists and provides a check after closing. The average amount saved by the heroes they assist is $3,000.
Military Mortgages: Seek a mortgage representative well versed in the DND clause, to avoid penalties upon your next posting.
Additional Tips:
Communicate with BGRS: Ensure you are in communication with BGRS throughout the relocation process.
Consider Market Conditions: Be aware of market conditions, mortgage interest rates, and the implications of buying versus renting.
Be Realistic: Ensure expectations are realistic for the new neighborhood by comparing your desired price range with current housing prices in the community.
Factor in Expenses: Include regular maintenance and commuting costs in your budget.
Understand Posting Types: Be sure of whether your posting is “restricted” or “prohibited” as this can affect your move and benefits.
By considering these tips, CAF members can navigate the home buying process more effectively.