If there was such a thing as the Moving Olympics, your military family could easily capture the gold.
Deciding whether to rent or buy when you move is a big question and a huge financial decision. Because you may move frequently with the military, you'll want to think carefully about what it means to own your home and do your homework before you sign on the dotted line. You'll need to be honest about how much house you can afford, so you don't end up "house poor." Luckily, whatever you choose, the Servicemembers Civil Relief Act can provide legal protection for active-duty service members.
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How to decide whether to rent or buy your next home
There are pros to each choice — it's just a matter of figuring out what works best for you.
Pros of renting:
- No maintenance responsibilities — Your landlord or complex manager should handle any repairs or upkeep, which is one less thing on your to-do list.
- Lower up-front costs — Most rentals require a security deposit and two months' rent — first and last — but that's typically much less than a down payment and closing costs on a house.
- Lower monthly costs — Though it depends on where you live, rent may be cheaper than a mortgage, but your basic allowance for housing will be the same. That way, if your rent is less than your allowance, you can automatically save money each month.
- Greater flexibility — You won't have to worry about selling your house when it's time to move again.
What to keep in mind if you decide to rent:
- The Servicemembers Civil Relief Act is designed to protect the legal rights of members called to active duty. Under the act, you can terminate your lease without penalty if you are entering active duty or being reassigned. You're also protected from being evicted if you can't pay your rent because of reasons related to your military service.
- Many leases also have an additional "military clause" that provides further protection for military families who rent and may need to break their lease, but this varies based on location and property manager. Make sure you read any existing clauses carefully before signing and consider asking for an additional clause if there isn't one already.
Pros of buying:
- Ability to personalize — You can do whatever you want to make your home your own. You can paint, do renovations and make landscaping decisions to suit your tastes.
- Tax breaks — You'll be able to deduct your yearly mortgage interest and real estate taxes from your federal and state income taxes.
- Equity opportunity — You could benefit if your home's value increases, which means you will make money after you sell it.
- Lack of landlords — While a good landlord can be a stress reliever, a bad landlord can make for a miserable renting experience. When you purchase a home, you won't have that risk.
What to keep in mind if you decide to buy:
- Protect yourself as a homeowner with the Servicemembers Civil Relief Act. The act allows active-duty service members to limit the interest rate for their financial obligations — including mortgages — to 6 percent. In some circumstances, you may be protected from foreclosure if you can't maintain your mortgage because of your military service. You can learn more about the act online or by contacting your legal assistance office.
- Figure out your budget and consider what kind of property you want to invest in. Remember, even if you are approved for a home loan greater than your budget, that doesn't mean you need to buy a more expensive house.
The best way to make the right decision about renting or buying is to use all the resources available to you. Still not sure what you can afford? Create your budget with a Military OneSource personal financial counselor for free. With your finances clarified, you'll be able to choose the situation that is best for you and your family.