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For many troops, packing up and moving to a new duty station raises a question: At the next stop, should you buy or rent?
It's a highly individualized decision. But in making it, it's impossible to ignore the problems that military families have faced with financial losses on homes they bought within the past six years.
Because of the steep decline in home values, many were left with homes often worth tens of thousands less than what they paid for them. And unlike their civilian neighbors, reassignment orders meant they couldn't stay put and wait for the market to improve.
"I'm not going to buy another house while I'm in the military. They're making us move a lot and it's just too dangerous to buy a property," said Navy Lt. Mike DiProspero, who faces at least a $25,000 loss on his house in Richmond, Va., when he moves his family in June on permanent change-of-station orders.
The DiProsperos are suffering a double whammy — they bought a house in Bremerton, Wash., in 2006 that has lost $50,000 in value.
They have renters, but they take a loss of about $900 a month because the rent doesn't cover the mortgage payment, and they've been unable to refinance the mortgage to reduce the 6˝ percent interest rate.
"We thought the market had bottomed" when they moved to Richmond in 2010, he said.
They decided it was a good time to get a house. Two years later, the market has dropped further, just as he's about to PCS.
"There goes all my savings for a rainy day." DiProspero said.
One Air Force major found himself with only one option when he PCSed — leaving his family behind at their home in Florida after it lost about one-third of its value. He sees his family once every few weeks.
"It's a chance you take," said the major, who asked that his name not be used.
They were able to refinance the mortgage to a lower rate, easing their financial situation. But they're still paying to maintain two households.
Worth careful consideration
Mechel Glass, an Army veteran who is director of education for CredAbility, a nonprofit credit counseling service, said her organization has fielded a lot of calls from military homeowners who have been transferred, weren't able to sell and are still paying the expenses on those houses — mortgages, roof repairs and all the other costs that are a homeowner's responsibility.
Analyze your homeownership decision carefully, Glass said. If you find that perfect house at a great price in a great neighborhood with great schools, and you're not stretching your finances, it may absolutely make sense to buy.
"But ask yourself: ‘If I were transferred next year, would I be able to make payments on both residences?'" she said, if you are unable to sell your old place.
Other questions to think about: What's the rental market like in the community, if you must rent out the house? And if you plan to come back later, will that house meet the needs of your family in the future?
A Navy lieutenant living in Woodbridge, Va., said he learned an expensive lesson when he and his wife bought a house in 2007.
"The day before closing, Wells Fargo said they could only cover 80 percent of the loan," he said.
They had to get a second mortgage for the remainder.
They have refinanced their first mortgage to lower their monthly payments but haven't been able to refinance the second mortgage, which has an interest rate at more than 6 percent.
Their house has declined in value by $30,000 to $40,000. So although he'd like to move, he has asked the Navy to keep him in the Washington area in hopes that the home will appreciate.
"In hindsight, we should have just walked away," he said. "But they pulled the rug out from under us the day before closing. We were moving from out of state, were staying in a hotel, and we had the movers lined up for the next day.
"This was my first loan with a second mortgage. I will never, ever get a second mortgage again."
That doesn't mean he'll never buy another house. His three houses prior to 2007 were financed with Veterans Affairs Department loans, and he cleared at least $20,000 in profit on each home when he sold it — enough for a down payment on the next one.
But next time, he said, "I'll be smarter about the loan."