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Should you own two homes?

Military moving around the world often contemplate a rental

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It is bound to come up in a military homeowner’s mind. Should you keep your current home and rent it out while buying another home at your next duty station?

An expert at Harborstone Credit Union says you need to know how VA loans work before boxing yourself into a corner.

Seeing that most military will use the VA loan process, you should first know that the VA does not allow you to purposely buy an investment property through its program, said Dennis Means, Home Loan Business Development Manager at Harborstone.

Therefore, timing is key if you want to own two homes.

“The VA is the biggest benefit for military homebuyers.” Means said. “And many people don’t realize you can own two homes using the VA.”

To own one home through the VA, keep it, and get another, all you have to do is know the timing rules between the loans. First, you can’t buy two at the same time.

This, of course, works for most military homeowners. If you bought your home when you arrived at your current duty station, then you simply will buy a second home at your next station with plenty of time between the two loans. You just need to show the bank that you either have the means to own two homes or have a renter squared away for the home you are vacating.

“A renter’s contract or letter of intent with a renter may help support your application,” Means said.

But what if you don’t have enough cash on hand to easily own two homes? You have an option: Refinance the first home if you have more equity than debt.

VA loans don’t require a down payment; however, if you plan to refi your first home to help with payments on the first or second home, you need to do that before considering taking a mortgage on the second home.

VA loans also allow you to get cash at 100% value, not 80% like a lot of conventional loans. Of course, the easiest way to handle all these decisions is to start with a mortgage expert, such as Means. Credit unions in particular are not-for-profit organizations owned by their members, so straight answers and loans in the best interests of the consumer are paramount at places like Harborstone.

Means also said owning two homes can be burdensome if either home has maintenance issues. Having the funds to cover repairs will be an important consideration.

“You should always be prepared for a financial shock,” Means added. “Ideally, you should have six months of your mortgage costs in a bank account to cover unexpected incidents.”

Visit harborstone.com or a branch near you for more information on home loans.

Equal Housing Lender.

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