While the thought of purchasing a home from a different country or state may seem daunting, for members of the Armed Forces it’s just another part of military life.
“This is a very common practice in the military community,” says Kelly Hasbach, a Century 21 realtor in Virginia who not only helps service members find homes while stationed overseas, but who has also moved her family seven times in the last ten years as the spouse of an active duty member of the Army.
“The PCS process can be challenging, but I always tell my clients to be patient and start the process as early as they can,” adds Hasbach. PCS refers to a “permanent change of station,” where you’ll be transferred to another base, possibly in another state or country.
Military buyers have been increasingly active in the real estate market. In 2019, active duty military and veterans made up 19% of all home buyers, according to the National Association of Realtors. In 2020, that percentage increased to 23%.
Indeed, the Veterans Administration backed over 1.2 million VA loans last year, by far the most in the program’s 77-year history. Purchase loans saw a year-over-year increase of 11%, says Chris Birk, vice president of mortgage insights at lender Veterans United.
In a recent survey, real estate service provider Realogy and online relocation support platform PCSgrades asked military families about the issues they encounter with duty station changes. Though most respondents said the pandemic made these moves harder, 77% said their interest in owning a home either increased or stayed the same compared to before the pandemic.
Thankfully, long distance home buying has become somewhat easier for military buyers as well as civilians as many lenders have improved their online application processes in response to stay at home orders. Real estate agents have also adopted virtual showings as an integral part of their services.
Is a home purchase while on active duty the right choice?
Military personnel often get their duty stationed changed, sometimes as often as every three or four years. Frequent moves mean that for some members of the Armed Forces, purchasing a home may not make financial sense.
For others, however, there are circumstances that may make owning a home worthwhile. Perhaps you’re reaching the end of your career and preparing to retire from the military. Perhaps you see the opportunity of buying a home as a commercial venture, planning on making improvements and reselling or renting the home out when you need to move again. Whatever the reason, your first step is to educate yourself.
“It’s a good idea for veterans to take a deep dive into what they think makes the most sense providing for their family’s financial future,” says Birk.
Deciding whether buying a home before moving is right for you will also depend on your personality, says Mark Pattison, a realtor with PorchLight Realty who works with active duty military buyers. If you like to be in charge of every detail of finding and purchasing a home, you may want to wait until you’re stateside.
Being stationed overseas, in particular, means you are relinquishing control over many aspects of the home buying process and leaving the heavy lifting to a real estate agent. Things like touring homes, checking out the neighborhood, checking on property values, and comparing VA and non-VA approved homes are tasks you would normally do on your own.
Find information on the area where you want to buy to help you determine if a purchase is practical. Is it an up-and-coming neighborhood or on the way down? Does it have the schools and other amenities that are important to you? Is it close to base?
Answering these questions can not only help you narrow down your search area but also determine affordability. How competitive is the market? Are home values still reasonable? Are you better off renting for now? These are all questions you need to ask before deciding whether to buy or not.
Once you decide a home purchase is the right choice, your next step is to make sure you’re prepared for the home-buying process.
6 tips for buying a home before a change of station
Check your finances
Go over your finances, including income, debts, credit score and monthly budget. Doing a deep dive into your finances can help you determine how much you can afford for a home purchase.
Use a mortgage calculator to help you come up with a reasonable budget. You should also consider if you’re purchasing the home on your own or, if you’re married, along with your spouse. You’ll also want to check your Certificate of Eligibility if you’re considering a VA loan.
Consider a VA lender
For members of the military it pays to at least consider a VA lender, since VA loans don’t require a down payment and generally have relatively low interest rates. VA loans are insured by the Department of Veteran’s Affairs, but made by private lenders. The VA also requires that lenders take a more holistic approach to underwriting VA loans than they might on conventional mortgages, according to Birk.
For example, in addition to credit scores and debt-to-income ratios, VA lenders will also take into account residual income, where the lender will require you to have a certain amount, which varies by area, in your bank account at the end of each month to ensure you can afford the loan.
“That gives veterans a clear sense that helps them start thinking about the outlays that are involved and try to have enough cash on hand at the end of the month,” says Birk. A solid residual income can help you qualify even if you don’t have perfect credit or exceed recommended debt-to-income ratios.
Check your eligibility, the VA lending limits and other criteria you’ll need to meet before applying for a VA loan. For example, to qualify for a VA loan it must be your primary residence and you must move into the home within 60 days of closing, although some exceptions can be made in the case of a deployment.
However, also check other options like conventional and FHA loans. You can sometimes find better rates with a non-VA lender, and not all properties meet the VA‘s requirements for the loan program. It pays to consider all options.
Find a real estate agent experienced with military buyers
Especially when you are deployed and unable to visit homes yourself, hiring an agent who is familiar with the PCS process as well as the VA loan application and VA home requirements can be helpful.
VA lenders are able to connect you with real estate agents who have experience with both the process.
“Going through a military relocation comes with a number of challenges, so working with an agent who understands these specific challenges and truly is a partner for you helps make the process easier and more seamless,” says Hasbach.
The biggest challenge is buying a house sight unseen. You’ll need someone to not only find a property and do the home tour but also coordinate tasks like making offers in a timely manner, closing dates, ensuring all the paperwork for the sales contract and mortgage loans are submitted on time.
In fact, managing the purchase timeline alone can be a complicated process. Orders for a PCS are usually given 90 days in advance, but there can be delays. The responsibility for getting closing dates changed will fall on your real estate agent, so having one with experience dealing with overseas buyers is a must.
A VA experienced agent will also help with finding a VA qualified home. In order to qualify for a VA loan the home needs to meet certain requirements. These include having working electric, heating and cooling systems, having lead-free paint, working sewage and sanitation and being free of termites, fungus and dry rot.
Prepare to be active on social media
One of the bigger obstacles you’ll face is distance. Being stationed overseas means having to come up with different ways of communicating, seeing the property and getting a mortgage.
What are office hours for you may not be the same as office hours in the city or country you’re planning on buying in. With a little bit of ingenuity and tech, however, these challenges can be overcome.
To help keep in touch, many real estate agents are turning to social media apps. Pattison says that most members of the military are using WhatsApp or Messenger as the best way to keep in touch with their representatives stateside.
Tour the property — virtually
You won’t be able to do an in-person tour from overseas or several states away, so you’ll need to rely on your real estate agent to give you as much information as possible. Most agents will do video tours through FaceTime or other video chat apps to do a full walkthrough of the home with you.
“We can do virtual tours that are as close to ‘face-to-face’ without the buyers actually being in the home,” says Hasbach.
Pattinson also makes a habit of making a video tour of the neighborhood as well as schools and any other points of interest to give the buyer a complete picture of what and where they’re buying. He notes that you may see a home that has been fixed up really nice but may not be located in the best of neighborhoods.
“You may not know it’s on a busy street, or you may not know it backs up to a dump, you know, like a literal garbage dump,” he adds.
Buying the home
Once you’ve found the right home, you’ll face your biggest hurdle yet — actually purchasing the home. To be exact, signing all the necessary paperwork.
Applying for a mortgage won’t be especially difficult. Most lenders have online applications available 24/7 so you can apply for a loan from anywhere at any time.
Signing the loan document is another matter. According to Pattison, once a seller has accepted your offer you’ll need to sign the loan documents with what is known as a wet signature — meaning you would have to sign the document in person.
If you’re stationed overseas, this will require that you set up a power of attorney with someone stateside that can sign the documents for you, or make an appointment on base to have your signature notarized. According to Pattinson, at some bases these appointments can take up to a month to make. That’s because not all bases have the facilities to set up a legal signature, so you would then have to make an appointment at a U.S. embassy or consulate.
“If your transaction is only 30 days long and you have to sign loan documents before closing, you have to make sure that appointment is scheduled right away,” says Pattinson.