Homeownership remains at the heart of the American Dream.
That's especially true for veterans and the military community, who continue to own homes in greater numbers than their civilian counterparts.
A home can be a great vehicle to build equity, but above all else it's a significant financial responsibility. It's important for potential homebuyers to take a serious look at whether they're ready to handle that responsibility.
The VA loan program does a tremendous job helping ensure veterans can truly 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 all of the last six years.
Still, there are no guarantees. Job loss, family changes and scores of other things can affect your financial health. The mortgage still needs to be paid.
Here are a few key financial considerations for prospective homebuyers to keep in mind:
Your monthly mortgage payment will typically cover your principal and interest on the loan, along with a portion of your annual property tax and homeowners insurance bills. You'll often see it expressed as PITI (principal, interest, taxes, insurance). The principal and interest portions won't change on a fixed-rate mortgage. But property taxes and homeowners insurance premiums can adjust annually.
In addition, you're responsible for regular maintenance and unexpected repairs. To be on the safe side, homeowners often budget about 1 percent of their home's value each year for maintenance and repair costs. That's $2,000 on a $200,000 home.
Despite the VA program's incredible track record, borrowers do occasionally default on their loans.
Late payments, loan modifications and foreclosure can crush your credit score and have a serious long-term impact on your financial profile.