by Maurie Backman | Feb. 4, 2021
Though veterans may be eager to embrace homeownership, buying is not always so easy for them.
The coronavirus pandemic changed a lot of people's financial plans, and that includes veterans. In fact, nearly 50% of veterans altered their home-buying plans last year, according to a recent survey from Veterans United Home Loans.
That said, veterans haven't given up on buying. In fact, almost two-thirds think the next 12 months will be a good time to purchase a home, and about one-third actually plan to buy this year. Meanwhile, 58% of veterans aim to buy a home within the next five years.
Just as many non-veteran buyers struggle to navigate today's housing market, so too are veterans having a hard time. Here are some of the challenges they encounter.
Home values have skyrocketed throughout the country during the pandemic. The reason? Low mortgage rates have fueled a surge in buyer demand. Sellers have the clear upper hand, and aren't generally looking to negotiate on price. Why would they, when it's clear that buyers are desperate to get in on today's outstanding mortgage rates? In fact, 51% of veterans are convinced homes will become less affordable this year.
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There's been a short supply of homes on the market, and that especially applies to starter homes. As a result, a lot of buyers, veterans included, can't find homes that suit their needs or budgets.
Veterans aren't alone in feeling iffy about the economy -- and their own finances. But 46% of veterans say the pandemic has caused them uncertainty, and is a potential barrier to buying a home this year.
Almost 90% of veterans think they'll need a credit score of at least 670 to qualify for a mortgage. But actually, to secure a conventional mortgage, all it usually takes is a credit score of 620. And veterans are eligible for VA loans, which technically don't impose a minimum credit score at all (though VA lenders can impose their own credit score requirements).
Furthermore, 41% of veterans think they need to put down more than 20% of a home's purchase price at closing. But many lenders accept a lower down payment, and VA loans can be secured with no down payment at all.
Today's low mortgage rates make it a great time to sign a home loan. But not all veterans are in similar financial situations.
Those who are financially secure may feel comfortable moving forward with a home purchase in the near term, but those experiencing lingering financial effects from the pandemic may want to wait. The good news is that as 2021 progresses,housing inventory may open up, at which point home prices could come down, giving buyers more options. At the same time, mortgage rates are likely to stay low for quite some time, so those who sit tight for a few months may not lose out at all in that regard.
Chances are, interest rates won't stay put at multi-decade lows for much longer. That's why taking action today is crucial, whether you're wanting to refinance and cut your mortgage payment or you're ready to pull the trigger on a new home purchase.
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