Military Service Members: Pros and Cons of Renting versus Buying after Relocation

As an active member of the military, relocating may often become a normal part of life for you and your family.   The decision to purchase versus renting your current or next home is a not the easiest choice to make.  As with any decision, there are pros and cons to each option.  We have put together a list of some of those pros and cons to help you with your decision.

Pros of renting:

Repair and replace expensive items – One of the great things about renting versus buying is that most of the responsibility lies with your landlord or complex management company rather than with you.  You never have to worry about replacing expensive items like air conditioning units, heating units, large appliances, etc.; you also don’t have to worry about the maintenance costs associated with repairing or replacing these items.

Insurance – Although you may wish to and probably should purchase renters insurance to protect your valuables, when renting you avoid the high costs associated with homeowner’s insurance.

Lower upfront and monthly costs – The costs to rent versus buying a home is typically much less expensive.  You will usually get your security deposit back after you move out of a rental should there be no irreparable damage to the rental and everything is left clean and in its prior condition.  Your monthly costs to rent will also be less expensive in most cases.

Routine maintenance – Depending on your rental community you may save money on routine maintenance items such as cutting the grass, replacing ac filters, area cleanup, painting, etc.

Flexibility – When it’s time to move, you don’t need to worry about selling your rental which means less hassle and responsibility.

One of the great things about being a service member called to active duty, is that you are protected by the Servicemembers Civil Relief Act (SCRA).  Under this act, you are permitted to terminate your lease at any time without penalty providing you are entering active duty or being reassigned to another location or station.  In addition, you cannot be evicted for non-payment of your rent or lease if the reasons for non-payment are related to your military service.  Your lease may even include an additional “military clause” providing you and your family with further protection from penalty should you need to terminate or break your lease.

Pros of buying your home:

More space or the possibility of more space – Depending on whether you are purchasing a house, townhome, or condominium, you will usually have more space or the possibility of creating more space by adding onto your house or changing the way your space is setup.

Privacy – When you own your home, you aren’t subject to leasing agents or landlords showing up or accessing your home whenever they see fit.  You can also install things like, privacy fences, security gates, or even buy a guard dog to keep unwanted guests from popping up at your door.

More freedom – Unless you have a homeowner’s association, you can usually decorate your home the way you choose.   And most homeowner’s associations will allow you to decorate or personalize your home however you choose within reason.

Equity – When you rent, you gain nothing when you move on.  When you purchase, you may build equity in your home depending on how long you are there or how much money you’ve invested.  If your home increases in value, you could make a profit when selling your home.

Tax breaks – You and your spouse may be eligible for specific tax breaks where you can deduct your mortgage interest and real estate taxes.

Investment – Home ownership can help you secure loans on other large purchases such as boats, automobiles, a second property, or even a business loan.

As a homeowner and active-duty service member the Servicemembers Civil Relief Act allows your interest rate for mortgages and other financial obligations to be limited to 6%.  Depending on your situation, you may be protected from foreclosure if you are unable to pay your mortgage due to military service.

The decision to rent or purchase a home is obviously a choice that requires consideration and planning.  As military family and experienced real estate professionals, we are here to help you by providing you with the options you need to make the best choice for your family.  Contact Military Movers Real Estate LLC. today 907-622-5000.

Military Helping Military…. Every Step of the Way!

Market Trends

Market Trends Info for Military Movers

PCS season is coming to a close. 2015 was a crazy year for sellers, and it seems word got out. This season, we saw the market even out a bit. More sellers listed their homes this year and the market saw less multiple offer situations and slightly longer days on market due to the influx in inventory.  Nevertheless, buyers are still out there and we are still here to keep you in the loop of what is going on in our market. The most recent weekly market stats as of the date of this publication are as follows:

Active to Pending Listing Statistics

Eagle River lead the market with 9.2%, followed by Palmer averaging 7.9%. Anchorage was at 7.5% and Wasilla at 4.2%. This is a broad scope and many variables are considered but the stats were calculated from the following sales data:

-Eagle River had 194 listings with 18 go under contract.

-Palmer had 126 with 10 go under contract.

-Anchorage had 848 active and 64 go under contract.

-Wasilla had 585 with 23 go under contract,.

Ever interested to keep pace with these numbers on a weekly or monthly basis? Like our Facebook Page! We post them at least twice a month.

Interest Rates

Interest Rates have maintained pretty steady at 3.25% -3.375%.  This is what is currently “par” rate with a few local lenders on a VA loan and is not indicative of any individual buyer’s loan terms. Regardless, these are still considered favorable rates. We have not seen any significant difference in rates related to the European Brexit situation that was recently announced. Many local lenders publish their rates daily on their websites should you decide to check them out! It is always important to note when referencing interest rates to pay attention to the “cost” for that rate. As many lower than average interest rates are not credit based, but more point based in what is called a “buydown” where a consumer can take a lower rate in exchange for a fee paid to the lender.

Refinance Offers via Mail

Have you received those VA refinance mailers lately? Does the rate seem exceptionally low and too good to be true? At least once a month we have someone call us wishing to list their home, and when we pull their payoff it is substantially more than it should be for the length of time they have owned the home. This is because they took advantage of one of the mailers and received a lower interest rate, thus lowering their monthly payment by $100-120.00 a month, but increasing their balance by $7,000-10,000.00 on average. These refinance lenders (not all but most) roll the closing costs for this refinance into your loan balance. Think of it as buying your house and paying the closing fees all over again. But instead of paying them at closing, you are financing them into your loan balance. Thus raising your balance, decreasing your equity, and prolonging the time you must keep the home before you can sell it.  We recommend you always read the fine print carefully when considering these refinances, and consider the length of time you intend to keep the home before adding a substantial amount to your loan balance that would take on average 6.5-7 years to pay off. ($8,000 added to your balance to save $100.00 a month would take 80 months to pay yourself back)