This article was sponsored by Navy Federal Credit Union. Navy Federal Credit Union is federally insured by NCUA.
The decision to buy a new house is monumental, involving both emotional and financial considerations. Whether you’re upsizing, downsizing, PCSing or seeking a change, understanding the signs that indicate you might be ready for a new home are crucial.
Here are 5 key indicators that it might be time to start house hunting:
1. Permanent Change of Station (PCS) Orders
For military families, PCSing can be tricky when it comes to buying and selling houses. The purchase of a home isn’t as black and white when you are moving every 2-3 years. Military members have to take it one PCS at a time. If you choose not to live on your military installation, you will have to evaluate if buying a new home at your next assignment will be financially wise.
Something to keep in mind is if you own a home at your current duty station, you may have purchased it at a time when interest rates were historically low. It might make more sense once you crunch the numbers to rent out that home and then choose to rent at the next assignment, especially if your new home will be in a high-cost of living area. This could result in a positive cash flow to build wealth.
Also keep an eye on your VA entitlement benefits. If you are thinking of keeping your current home to rent out when you PCS, then a second (or third) mortgage may require you to have a downpayment.
If you are looking to buy a home during your next PCS, Navy Federal Credit Union offers home loans specifically tailored for military families, making the transition smoother. Their Military Choice Mortgage and VA loans are designed to accommodate the unique needs of service members, ensuring you find a home that fits your lifestyle and budget.
2. Mortgage Rates
Mortgage rates can significantly impact your monthly payments and long-term financial planning. Keeping an eye on interest rates is crucial, as a favorable drop can save you thousands of dollars over the life of your loan.
Interest rates are high right now, and if you don’t have a downpayment, you might consider buying down your interest rate. Another option is Navy Federal’s no-refi rate drop program1. This program, offered on certain loan programs including the Military Choice loan, allows you to lower your mortgage rate without going through the full refinancing process, making it easier to take advantage of market conditions. If mortgage rates go down after you close on your home with Navy Federal, you can lower your rate for just $250 and save thousands in closing costs without going through the refinancing process. If current mortgage rates are lower than what you’re paying, it might be an excellent time to consider a new home or refinance your existing mortgage to reduce your monthly payments.
3. Rising Property Taxes or Insurance Costs
Property taxes and home insurance costs can fluctuate based on various factors, including local government decisions and natural disaster risks—just ask Californians experiencing wild fire insurance spikes or Floridian’s hurricane premiums. A sudden spike in these expenses can make your current home less affordable, straining your budget.
If you’ve noticed a significant increase in your property taxes or insurance premiums, it may be time to evaluate your living situation. Moving to an area with lower property taxes or insurance rates can help alleviate financial pressure.
4. Big Life Events
Life changes such as having children, getting married, or even becoming an empty nester can signal the need for a different living space. A growing family might require more bedrooms, a larger yard, or proximity to quality schools. Conversely, if your children have moved out, downsizing might make sense to reduce maintenance and free up equity. These significant life events often necessitate a reassessment of your current housing needs.
5. Downsizing to Refocus Money Goals
Sometimes, the desire for a new home stems from the need to realign financial goals. Downsizing can be an effective strategy to free up capital, reduce living expenses, and refocus on other financial priorities such as retirement savings, travel, or investing. If you find that your current home is more than you need, selling it and purchasing a smaller, more affordable property can provide financial flexibility.
Recognizing the signs that it might be time for a new home can help you make strategic decisions that enhance your quality of life and financial well-being. Take advantage of the tools and support available through Navy Federal Credit Union to ensure your next move is a successful one.
1 (a) To be eligible to exercise the no-refi rate drop (Rate Reduction) option and receive a reduction to the interest rate on your loan, you must meet all of the following criteria:
(1) Your loan is one of the following fixed-rate mortgage loan products: Homebuyers Choice, Military Choice, or 15- and 30-year Jumbo Fixed loans (collectively, “Covered Loan Products”) with Navy Federal Credit Union. Cash-out refinance transactions, however, are not eligible for the no-refi rate drop option.
(2) (A) You must contact us and request to exercise the no-refi rate drop option; (B) the reduced interest rate for your loan must be at least 0.25% lower than your existing rate when you request to exercise the no-refi rate drop option; (C) your loan must be current with no more than one monthly payment, which includes principal, interest, taxes, and insurance, that has been 30 days late or more within the last 6 months of your request; (D) you have made at least 6 consecutive monthly payments, which includes principal, interest, taxes, and insurance, on your loan since closing or the last time you exercised your no-refi rate drop option; (E) you do not have an active bankruptcy case pending or you have not filed for bankruptcy protection within 6 months prior to your request; (F) your loan is not in an active loss mitigation option, process, or consideration; and (G) you continue to own the property, notwithstanding successor-in-interest exceptions.
(b) You must pay a $250.00 fee each time that the no-refi rate drop option is exercised. There is no limit on the number of times the no-refi rate drop option can be exercised if all applicable criteria are met each time.
(c) Exercising the no-refi rate drop option will permanently reduce your interest rate, as well as the remaining principal and interest payments on your loan but will not modify any other terms contained in your loan documents, including the principal balance, maturity date, and additional amounts due for escrows as part of your monthly Periodic Payment under your Security Instrument.
(d) RATES AND TERMS ARE SUBJECT TO CHANGE AT ANY TIME WITHOUT NOTICE. To exercise the no-refi rate drop option, you must contact Navy Federal. You are solely responsible for monitoring Navy Federal’s available rates and determining when to exercise the no-refi rate drop option, subject to the eligibility criteria identified above. Contact Navy Federal at 1-703-255-8665, Option 1, to check your eligibility and current rates. Navy Federal will only reduce the interest rate of a Covered Loan Product under the no-refi rate drop option if all applicable criteria are satisfied at time of your request to exercise the option. These terms and conditions do not constitute a commitment to lend, nor a guarantee that you will be approved for a mortgage loan from Navy Federal Credit Union.
(e) Choice loan products require a 1.00% origination fee, which may be waived for a 0.25% increase in the interest rate; are subject to a funding fee of 1.75% of the loan amount; and the funding fee can be financed into the loan up to a maximum of 101.75% LTV, or the fee can be waived for a 0.375% increase in the interest rate. Purchase loans require no down payment. LTV restrictions apply to refinance loans. To be eligible for a Military Choice loan, at least one borrower must be Active Duty, reservist, or a Veteran.
(f) Payment examples:
A Military Choice loan of $300,000 for 30 years at 6.375% interest and 6.693% APR will have a monthly payment of $1,871. A Jumbo Military Choice loan of $800,000 for 30 years at 6.750% interest and 7.076% APR will have a monthly payment of $5,188. Taxes and insurance not included; therefore, the actual payment obligation will be greater. All loans subject to credit approval. Jumbo Military Choice loans are loan amounts above $766,550 up to $1,000,000.
A Homebuyers Choice loan of $300,000 for 30 years at 6.500% interest and 6.821% APR will have a monthly payment of $1,896. A Jumbo Homebuyers Choice loan of $800,000 for 30 years at 6.875% interest and 7.203% APR will have a monthly payment of $5,255. Taxes and insurance not included; therefore, the actual payment obligation will be greater. All loans subject to credit approval. Jumbo Homebuyers Choice loans are loan amounts above $766,550 up to $1,000,000.
A Jumbo Fixed loan of $800,000 for 30 years at 6.250% interest and 6.394% APR will have a monthly payment of $4,925. Taxes and insurance not included; therefore, the actual payment obligation will be greater. All loans subject to credit approval. Loans over a certain amount are called jumbo loans. In most states, mortgage loans greater than $766,550 are jumbo loans. In AK and HI, any loan over $1,149,825 is considered a jumbo loan.