Veterans Feel Ready to Buy Homes -- but They Face Challenges
by Maurie Backman | Updated July 19, 2021 - First published on 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.
1. Rising home prices
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.
2. Low housing inventory
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.
3. General economic uncertainty
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.
4. Homebuying misconceptions
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.
Is now a good time for veterans to buy?
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.
The Ascent's Best Mortgage Lender of 2022
Mortgage rates are on the rise — and fast. But they’re still relatively low by historical standards. So, if you want to take advantage of rates before they climb too high, you’ll want to find a lender who can help you secure the best rate possible.
That is where Better Mortgage comes in.
You can get pre-approved in as little as 3 minutes, with no hard credit check, and lock your rate at any time. Another plus? They don’t charge origination or lender fees (which can be as high as 2% of the loan amount for some lenders).
About the Author
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.