Do VA Loans Offer An Advantage Over Renting?
Some published reports state that rents have gone up 30% in the last ten years. One CNNMoney report speculates that renters could pay an additional seven percent over the next 24 months.
There are plenty of arguments about the virtues of owning a home versus renting one. Active duty military members have special challenges compared to their retired or separated counterparts when it comes to making the choice to own or rent, but in the end some simple math could be the final decision maker. Does it make more financial sense to rent or own?
There are many loan calculators available online which can help. One example is available at Realtor.com and is fairly simple to use. This is the Ginnie Mae Buying Vs. Renting calculator, designed specifically to help answer the rent/buy question.
To properly use this calculator, you’ll need to know the amount of your current rent, plus some details about a potential home purchase. The calculator needs the purchase price of the home, how much money down you’re considering (unless you plan on getting a VA no-money-down home loan), the interest rate, property tax rate and a few other pertinent details.
Obviously this data will take some time to compile, but once you have a rough idea it’s easy to get a figure from the calculator. Do you need an exact interest rate? Probably not, but when estimating the rate, be conservative and try to plug in a slightly higher interest rate than you may qualify for–it will help give a more realistic picture of the possible cost of getting a home, especially in a rapidly changing housing market.
VA home loans do offer the borrower some distinct advantages over renting, but it’s important to approach your loan with some long-term thinking. That’s especially true for active duty military members who may be deployed, reassigned, or retiring soon.
Consider your home loan as a long-term investment and try to think down the road when choosing the type of loan, making down payment decisions, etc. The early choices you make with a VA home loan about the down payment, for example, could save you money over the long term. That’s also true for the type of loan (fixed-rate versus variable rate) and other factors.