Category Archives: Mortgage

Veteran saluting to US flag

Unaffordable Housing for Post-9/11 Veterans

Veteran saluting to US flagAs a benefit of military service, U.S. veterans are given better homeowners insurance premiums and are provided many educational and housing subsidies. Academy Mortgage Arizona notes the importance of helping veterans and active military achieve the American dream of homeownership. These aids make it easier for veterans to own homes than civilian populations were.

Unfortunately, this is an advantage that has continued to break down after each war. The post-9/11 veterans are the first generation not to enjoy a housing affordability advantage.

Veteran Homeownership by War

Post-9/11 veterans struggle to keep up with homeownership costs. They are more burdened with rising housing prices than earlier generations of veterans had been and when compared to the non-veteran civilian population. A study found that homeownership by this subset of veterans has declined to about 40%. This rate has fallen below the 60% non-veteran homeownership rate and is a staggering difference to homeownership rates for veterans of the Korean, Vietnam, and Gulf Wars.

Further, the same report found that 35% of post-9/11 veterans experienced cost burdens. This was compared to rates of below 25% for prior veteran generations. Individuals were considered cost burdened if they spent more than 30% of their income on housing. Finally, post-9/11 veterans were also 5% less likely to afford housing costs than civilians of the same age, race, and gender.

Homeownership Gap

The staggering differences in homeownership can be explained by a variety of factors. Post-9/11 veterans do not earn lower incomes than non-veterans. This means that their struggle for affordability is not dependent on the labor market and how much they are earning. Instead, one possible reason is that 21st century veterans are younger and the younger generation is renting more than they are buying.

Veteran holding a model houseThe veteran population today is also more diverse than past generations and minorities continue to feel the long-lasting effects of residential segregation and experience implicit discrimination. This problem may explain why, while African-American and Hispanic veterans account for only 15% of the total veteran population, this population makes up 45% of all homeless veterans.

The housing crash during the Great Recession of 2008 also factors into reduced homeownership. The environment of that era meant cheap credit was offered for all prospective homeowners. As such, the housing price benefits provided by Veterans Assistance loans were not as significant as they otherwise would have been. Veterans were offered homeowners insurance premiums that were not so much reduced as those offered to civilian populations.

The differences in housing affordability across various veteran generations consisted of problems that the initial veteran assistance policies were not designed to address. The combination of these factors sets veterans on the path to homelessness and housing instability. This is compounded by the lack of affordable housing in metropolitan areas.

It is important to find new solutions to address the housing concerns that post-9/11 veterans are facing, as younger adults are beginning to enlist in the military. This may involve further programs and policies to support veterans in the housing market.

an agent shaking hands with clients

Important Factors to Consider When Planning to Use 401(k) for Your Mortgage

an agent shaking hands with clientsA 401(k) is a great retirement savings plan sponsored by most employers. It lets employees save and invest a particular portion of their salary before they get tax deductions. In some cases, you could take a part of your funds from your 401(k) to pay for mortgages in Utah, notes Altius Mortgage Group.

However, taking funds out of your retirement account would cost you a lot in the long run. Beef up your savings beforehand. Expect to pay 20% of the property’s purchase price as soon as you apply for a home loan. It can be a challenge to spend thousands of dollars for a down payment alone.

So, ensure you have enough funds that you can access to settle the down payment for the property. Consider applying for smaller lenders. In some cases, larger banks usually support these, which can give you the same benefits as with big banks.

Home Loan

In fact, you could even find several home loan options not always available in bigger banks. They also provide a more tailor-fit service for their customers, such as longer loan durations and even higher lending ratios. You should consider tapping into your 401(k) as a last resort.

Having your own 401(k) is quite beneficial, especially for millennials. Having one would ensure that you wouldn’t have any problems once you reach your golden years. Although it is possible, you might want to look for other sources of funds instead of using your 401(k) savings.

These are just a few factors that you may want to consider if you’re planning to use your 401(k) for your home loan. You could try to coordinate with your lender and ask for any alternative options for your loan’s down payment.