It's PCS season, and that means across the world military personnel are getting ready to move. And with each of these moves comes a host of decisions -- schools, recreation, safety, length of commute -- but among the most important ones is whether to buy or rent your home at your new duty station. Here are 5 things to consider when making that call:
1. Can you finance the home using your VA home loan benefit?
There are a bunch of advantages to using a VA loan. VA home loans require zero money down, and because they're underwritten by the U.S. government, sellers are usually comfortable with accepting offers from buyers using them. Also, VA home loans can be assumed by qualified buyers, which is a great option when considering the volatility of the military lifestyle. For more information check out the VA's site here.
2. Can you build equity during the time you're in that area?
Nobody buys a home to lose money in the process. Before you buy, consider the real estate market trends. Are home pricing rising or falling . . . and how quickly? Making money on a home after owning it a short time is ambitious, but not impossible in the right market.
3. Can you sell your home quickly when you get orders away from the area?
Just like in the previous bullet, market conditions are important when considering how quickly you could sell your home when the time comes. The easy way to assess this is to consider how many "for sale" signs there are on the street around your desired home. If there are a lot of them you might want to think twice about buying, especially if you're only planning on being in the area for a couple of years or less.
4. Could you turn your home into a rental property if you got orders away from the area?
If the rental market is active in your area you might consider turning your home into a rental property. In some areas, the amount an owner can charge for monthly rent exceeds the owner's mortgage payment, which allows the owner the retain all the associated tax benefits while continuing to build equity. But owners should also consider the responsibilities of being a landlord, not the least of which is keeping track of how the tenant is treating the property.
5. Is the duty station where your home is one to which you're likely to return?
Will your career path bring you back to the area? Would you consider staying there once your time on active duty is over? And would you be willing to rent the home (see the previous bullet) in the meantime? If the answer to these questions is "yes," then the equity timeline can be stretched out and the risk of buying is reduced.
To start the process, check out Zillow.com's cool buy/rent calculator here.