Thousands of members of every branch of the military spend years and sometimes decades in the Washington area in locations such as Andrews Air Force Base, Fort George G. Meade, Fort Belvoir and Marine Corps Base Quantico.
Though some opt to rent if they know they will be in the area for a short time, others buy property in the region. Even those military members who know they will be in the area for just a few years sometimes choose to buy a home to make a financial investment, intending to rent out the property until they return to the area or decide to sell.
In many ways, military households are no different from any others choosing to buy a home. The main difference is that many, although not all, military members are transferred from one location to another with some regularity.
“One great thing about working with military customers is that nine times out of 10 they are a good credit risk,” says Michael Christofaro, vice president of Presidential Mortgage in Beltsville, Md. “Typically, military people are well-disciplined in all aspects of their lives, and they know that if anything gets out of hand in terms of credit problems, that information could get to their commanding officer.”
Beverly Frase, manager of the Military Family Housing Lender Education Program at USA Cares, a nonprofit organization dedicated to assisting military personnel, veterans and their families, says lenders need to recognize that military families often have a different lifestyle than other homebuyers and need specialized services.
“Military families are often transferred every two or three years, so they sometimes need to move faster than other families,” Mrs. Frase says.
“If they are moving to an area where there are a lot of military families moving in at the same time, such as Fort Bliss, Texas, they will need to get a fast prequalification. Some families will have only a weekend or so to find a home, so their financing needs to be arranged fast.”
Mrs. Frase developed the USA Cares Military Family Housing Lender Education Program to help lenders understand the unique circumstances of military buyers and to help them understand military terms, ranks and the pay system.
“Military families should be in appropriate, affordable loans, and we hope this program can help lenders make sure these families are in sustainable loan products,” Mrs. Frase says. “About 50 percent of our weekly spending at USA Cares goes to help military families with housing issues. The issue we have had to deal with a lot is that if the family takes on a mortgage loan at the top of their affordability scale, it doesn’t take much to tip over and find themselves in financial trouble.”
The lender education program covers such issues as the basic allowance for housing and what happens to pay rates if a military member is temporarily or permanently disabled. In addition to lenders, housing counselors and military families may take the course.
Mrs. Frase says lenders are also trained to recognize that VA loans may or may not be the best product for each individual military family.
Barbara Sheehan, assistant vice president of mortgage products for the Navy Federal Credit Union in Vienna, Va., says that for most military families, a Veterans Affairs loan often is still the best program available. VA mortgage financing has been available and updated regularly by Congress since World War II.
While the VA itself does not provide these loans, it guarantees them up to loan limits that vary by area, typically $417,000, but with higher limits in some areas. In Washington, D.C., and its close-in suburbs, the loan-guarantee limit is $768,750 until Dec. 31.
VA loans are available only for the purchase of property to be used as the principal residence for the military family member. The main benefit of VA loans is that in most cases, borrowers do not have to make a down payment.