Compare Several Types of Mortgages
Servicemembers can qualify for a VA loan, which lets you buy a home with zero money down and no private mortgage insurance (see benefits.va.gov/homeloans for details). Interest rates on VA loans tend to be comparable to other mortgages, but fees are sometimes higher. If you have a good credit score and can make a down payment, the VA loan may not be the best deal, says Andy May, chief operating officer for AAFMAA Mortgage Services, which specializes in helping military families with a variety of types of mortgages.
“Only one in three people we work with select a VA loan when they’re presented with all of the options,” he says. Veterans with a disability rating, however, get a break on VA loan fees, usually making that their best deal. If you do get a VA loan with no down payment, recognize that if prices fall even modestly, you could wind up underwater, which means you’ll owe more than the house is worth.
Boost Your Emergency Fund
Keep extra money in a safe and accessible account that you can use to cover your mortgage, utilities and other expenses for a few months if you can’t find a new renter right away. The Servicemembers Civil Relief Act makes it easy for members of the military to get out of leases when they’re deployed or receive orders to move–which can be great when you’re the renter, but tougher when you’re the landlord and lose your tenant with little notice.