Practicing Responsible Homeownership

Home ownership is central to the American Dream.

This is particularly true for veterans and the military community, who continue to own more houses than their civilian counterparts.

A property can be an excellent way to generate value, but it also carries tremendous financial burden. Potential homeowners should carefully consider if they are prepared to undertake that duty. The VA loan program does an excellent job of ensuring veterans can genuinely afford the homes they purchase. In fact, this no-down payment program has had the lowest foreclosure rate of any mortgage on the market for nearly the whole six years.

However, there are no promises. Job loss, family upheaval, and a variety of other factors can all have an impact on your finances. The mortgage still has to be paid.

Here are some significant financial issues that potential homeowners should bear in mind:

More than a mortgage payment

Your monthly mortgage payment will normally cover both the principle and interest on the loan, as well as a percentage of your annual property tax and homeowners insurance costs. PITI (principal, interest, taxes, and insurance) is a common acronym. A fixed-rate mortgage’s principle and interest parts remain constant. However, property taxes and homeowner’s insurance rates are subject to yearly adjustments.

In addition, you are in charge of routine maintenance and unforeseen repairs. To be on the safe side, homeowners typically budget around 1% of their home’s worth every year for maintenance and repair charges. That’s $2,000 for a $200,000 property.

Default does happen

Despite the VA program’s excellent track record, borrowers occasionally default on their loans.

Late payments, loan modifications, and foreclosure can all lower your credit score and have major long-term consequences for your financial profile.