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Risks of Buying a Home as a Military Family


There is a lot to love about owning a home, especially when you're in the military. Not only is homeownership part of sound financial planning for many people, but it also provides stability, pride, and a place to call home. But not every home purchase is smooth sailing.

General Risks of Buying a Home

Military families can avoid losing money on the deal by understanding the four primary risks involved in the home-purchase process:

  1. Earnest money and due diligence deposits (cash the buyer pays directly to the seller, as well as cash held in escrow).
  2. Time wasted (opportunity costs).
  3. Actual costs of property appraisals and inspections.
  4. Poor decisions in determining the real value of the property.

You will also encounter other general home risks, including maintenance, price decline, and upkeep, but you can stay ahead of such complexities that are part of the home-buying experience — and reduce stress — by educating yourself on the process. AAFMAA Mortgage Services LLC (AMS) state-licensed loan experts can help arm you with the information you need before you encounter these pitfalls.

Buyer Beware States

In buyer beware states, such as North Carolina, homebuyers bear the brunt of any mistakes made during the home-buying process. The vendors and entities you hire rarely will be held responsible for mistakes and, therefore, it’s important for you to make sure you hire vendors who are licensed and professional. AMS state-licensed loan officers assist military families like yours in protecting earnest money and due diligence deposits.

Risks of Buying a Manufactured Home

While manufactured homes can be great options for families with tight budgets, they typically depreciate over time. If you purchase one and plan to sell it in the future, it may not be worth as much as you paid for it. Additionally, many lenders view manufactured homes as personal property rather than real estate. Consequently, you may have trouble selling your home later because many lenders won't finance them.

Risks of Buying a Short-Sale Home

Short-sale homes are sold for less than the seller owes on them. They're usually sold "as is," so you will have little ability to renegotiate once an inspection reveals problems. Because short-sale homes require banks' approval as well as the homeowner’s, it can take months for a deal to close, if it closes at all.

Risks of Buying a Foreclosed Home

Not all foreclosures will qualify for a VA loan. The home must be habitable and cannot have mold, pests, or other health hazards. It also must not be in a state of disrepair where it would pose a safety problem for the occupants.

The Importance of a Trusted Real Estate Agent

The process of purchasing a home typically involves hiring a real estate agent. Before you sign a contract, speak with AMS regarding the above four risks. Some agents have controlled business arrangements (CBA), which may be your first indication of the underlying risk.

Military homebuyers should always ask their real estate agent or mortgage company if a CBA exists on the property. Before signing a contract, contact an AMS state-licensed loan officer who can explain the impact of such arrangements.

In addition, you can search for real estate agents who specialize in serving military clients by visiting Real estate agents with a “Military Relocation Professional” designation are trained in the unique needs of military homebuyers by the National Association of Realtors®️ (NAR)

How Homebuying Works

When a homebuyer makes an offer, they give due diligence money to the seller. The seller then cashes the check from the buyer and keeps it as payment for entering into the home purchase contract. Two to three weeks after entering the home purchase contract, the seller "vests" in the buyer's earnest money check and may keep this money as well. Earnest money, which can be as high as 1% of the purchase price, and due diligence monies are typically returned to the home buyer at the time of closing. However, in unfinished transactions, the seller may keep the buyer's due diligence and earnest monies. On a $200,000 home, this can equate to $2,000. So, be prepared.

Utilize the Experienced Expertise of AMS

If your military family is thinking about purchasing a home, be sure to take time to understand all the risks of buying a home. AAFMAA Mortgage Services LLC (AMS) specializes in military home loans.

We’re here to help you navigate through all the financing choices to find an option that suits you best. Contact us today for answers to all your home financing inquiries.