Effectively using your BAH – Base Housing Allowance
If you’re active Military you can use your Base Housing Allowance to purchase Real Estate and create Generational Wealth. Your BAH as it’s known is one of the wonderful advantages of serving in the military and you get to use that money to provide housing for you and your family. A lot of people in the military use their BAH to either rent on base or rent off base, but did you know you can use that money to help you qualify for a loan? It’s true, you can use your base housing allowance as income and build wealth exponentially.
Watch the below video for more information about using your BAH and VA Loan to purchase real estate
Now think about this; if you can use your BAH as income, then you can use your BAH to help build wealth. That’s right you can purchase a home using your BAH and if you get transferred via a PCS, or permanent change of station, you can keep your house and use it as a rental. I’ve helped many active military do just this. There is a couple of things to keep in mind, but most importantly you need to understand that you’re using the money the government is giving you as an allowance. So, you can choose to use the money for rent or to own.
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Here’s how it works. The BAH is used for your housing. So lets’ say you get $2,500 per month in BAH. Depending on your debt to income ratio, meaning the amount of monthly debt you have in car payments, credit cards, and other loans due every month, you then add to your income the amount of your BAH. So if your income is $7,000 per month from the military, and you get an additional $2,500 per month in BAH, your total income is now $9,500 per month. This income total will help you qualify for your home loan or mortgage.
Taking this a step further let me show you how to use your BAH to purchase your first home, or any home, and have the BAH cover the home loan or mortgage. First thing is you need to know your exact BAH allowance. From there with the example above you need to speak with a lender to see how much you can borrow and the key is to try and keep what you borrow within what your allowance is. So, $2,500 per month in a mortgage payment is roughly $500,000 mortgage at an interest rate of 4.25%. Now once you know how much you qualify for you know what size home you can afford in the market you live in.
Check Out This Mortgage Calculator
BAH and PCS
How to make money using your BAH and PCS
Some Trickery. If you find a home and you’re only using $2,000 per month in your mortgage payment, you can use the remaining balance for your utilities. This is how we have helped many in the military purchase a home and build massive wealth. You see, once you own the home and you’re making the mortgage payments, ownership stays with you. So lets’ say you get PCS to another area. You don’t have to sell the home if you don’t want to. You can rent the property out and have the tenant sending you monthly rent payments and usually those payments are at or above your mortgage payment and you get to keep the extra money. Remember you continue to get your BAH allowance and you can use it at your next destination either renting or purchasing another property.
Wouldn’t it be nice to produce generational wealth for your family and children? This is exactly how we do it!
VA Loan
Most people either active military or discharged military understand that they automatically qualify for a VA loan via their Veterans Certificate. This is one of the best loan programs in the country as it allows the active military or veteran to purchase a home with Zero Money Down. Meaning, using your VA loan you can actually purchase a home with zero money out of your pocket. Again, this is the only mortgage or Home Loan program available where the buyer has no money out of their pocket.
Now with the above being said, there are stigmas and negative attitudes regarding VA loans that I’m going to disprove and show you how to use your VA loan effectively. I’m going to explain to you the stigmas and a solution so when you do find the home you want to purchase, your offer stands out and the seller doesn’t push your offer aside because of fear or greed.
It use to be when someone used a VA loan the seller had to pay all the buyers closing costs. This was another thank you for your service situation which was great when the first VA loans were available, but in the market today sellers, for the most part, don’t want to loose any money. The good news, is as a buyer using your VA Certificate, you can pay your own closing costs. Now I know this means there’s money out of your pocket, but in a fast market and with your offer being one of many, you may just need to pay your closing costs. By the way, closing costs to purchase a home are usually much less than a downpayment of 3.5%, so even paying your own closing costs using a VA loan is much less expensive than using another loan type.
So, one of the techniques used today to get a VA offer accepted is the buyer pays their own closing costs. Additionally in a sellers market when homes are selling for above appraised value, the buyer using a VA loan has a better chance of having their offer accepted by covering all or a portion of any appraisal gap. Meaning if you write an offer at $450,000 but the home only appraises for $440,000, you as a buyer will pay the difference or a portion of the difference.
I know this may sound confusing so the key with anyone purchasing a home is to first get qualified by a lender to know what you’re comfortable with regarding your loan and your monthly payments. Then work with a licensed and trained professional when negotiating and submitting your offer. Make sure you’re working with people that understand VA Loans so the loan process is smooth and the agent that’s representing you with the purchase will explain you offer effectively to the seller and the sellers agent. One last note, keep in mind that working with a licensed real estate agent does’t cost you a penny as the agents commission is paid for by the seller.
Let me know if you have any questions or if you need anything by emailing me at Troy@TroySage.com or feel free to call me direct at 469-829-7713. I’m here to server you and help you with all your real estate needs.
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