PCS Resources

It’s Homebuying (and PCS) Season… Are You Ready?

2023-06-29

It’s that time of the year when some servicemembers and their families are preparing for a permanent change of station (PCS) move. In recent years, rising interest rates and home prices have made those moves more challenging, but this year may be different. While prices and interest rates are predicted to rise, the upticks will be more incremental, and homes will sit on the market longer. For buyers, that translates to more inventory and the potential to negotiate with sellers.

If you’ll be buying this summer, you’ll want to brush up on some basics. We suggest you download the free AAFMAA Mortgage Services LLC (AMS) Homebuying Guide and follow the tips below.

1. Consult the Professionals Upfront

As a first step, you will want to contact lenders or a real estate agent to get an idea of your financial shape to buy and how much you’ll be able to spend (we have a free online affordability calculator that can help).

You’ll want a professional by your side who will advise you on the local housing market, be your “boots on the ground,” and educate you on the homebuying process, especially if things go awry. These professionals can point out “red flags” that would hurt your chances of having a bid accepted or getting favorable loan terms. For instance, a lender may recommend you raise your credit score if it’s under 620, while a real estate agent can monitor listings, arrange for showings, and work with the seller’s agent to get any questions you have answered.

Note: there are certain topics, such as neighborhoods and school districts, that agents are not allowed to discuss with buyers, so you’ll still need to research those on your own.

2. Get Pre-Approved

If you’re financially ready to buy, the next step is getting pre-approved by a lender. A pre-approval is not a guarantee you’ll qualify for the loan and it does not bind you to that lender – you can still “shop around” for the best loan terms when the time comes.

There are two stages to a pre-approval. To start, you’ll need to fill out a loan application and provide income, asset and debt information. As a second step, lenders, including AMS, use an automated underwriting system to independently verify your income, assets and debt. If your initial information is consistent and meets our underwriting guidelines, we’ll provide you with a pre-approval letter.

Being pre-approved lets you move forward with confidence and signals to your real estate agent and sellers that you are a serious buyer. Knowing you’re pre-approved (versus other bidders) can settle an anxious homeowner and encourage them to work with you.

3. Do Your “Home” Work and Shop Around

You’ll want to do a little prep so familiarize yourself with the terms your lender will use. In addition to our Homebuying Guide, we offer buyers a “cheat sheet” of 11 mortgage acronyms you’re likely to come across. Knowing what these mean can move things along more quickly and help you feel more confident.

However, if a real estate agent or lender uses a term you’re unfamiliar with, be sure you ask them to explain. This not only builds your knowledge but shows their willingness to work with you in making the process clear and understandable (we think that’s a big plus!). It’s also a good idea to talk to multiple lenders and compare quotes. According to Freddie Mac, getting just one additional rate quote could save you an average of $1,500 over the life of the loan, and getting five more quotes saves an average of about $3,000.

There are also downpayment assistance programs across the country that can help you boost your downpayment and help cover closing costs (typically 2% to 5% of a home’s purchase price). Many of these programs waive first-time buyer requirements for servicemembers and Veterans, and some are available exclusively for members of the military.

4. Be Ready to Negotiate

Believe it or not, there’s room for negotiation at many steps in the buying process, from knowing your lender can close your loan quickly to having the seller cover a portion of your closing costs

First, let your agent help you craft an attractive offer that leaves some room to negotiate with the seller on price until you agree or walk away. Your offer can include specific “carrots” you feel would make it stand out like being willing to close quickly (say in 30 days) or rent back to the seller if they need to stay in the home longer. You can also ask the seller to cover all or a portion of your closing costs, pay for a one-year home warranty, or agree to a temporary buydown.

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