The Military Families Learning Network's Personal Finance group will present a 90-minute presentation on home buying and selling tips and tactics for military families on April 15 at 11 a.m. ET. More info: https://learn.extension.org/events/1501/

1. Welcome to the
Military Families Learning Network Webinar:
Military Home Buying & Selling
This material is based upon work supported by the National Institute of Food and Agriculture, U.S. Department of Agriculture,
and the Office of Family Policy, Children and Youth, U.S. Department of Defense under Award No. 2010-48869-20685.
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2. This material is based upon work supported by the National Institute of Food and Agriculture, U.S. Department of Agriculture,
and the Office of Family Policy, Children and Youth, U.S. Department of Defense under Award No. 2010-48869-20685.
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Welcome to the
Military Families Learning Network Webinar:
Military Home Buying & Selling

3. Additional Resources Available
https://learn.extension.org/events/1501

4. Today’s Speakers
Dr. Barbara O’Neill, financial resource management specialist for Rutgers Cooperative
Extension, has been a professor, financial educator, and author for 35 years. She has
written over 1,500 consumer newspaper articles and over 125 articles for academic
journals, conference proceedings, and other professional publications. She is a
certified financial planner (CFP®), chartered retirement planning counselor (CRPC®),
accredited financial counselor (AFC), certified housing counselor (CHC), and certified
financial educator (CFEd). She earned a Ph.D. in family financial management from
Virginia Tech and received over three dozen awards for professional achievements and
over $900,000 in funding for financial education programs and research.
Barbara Lang had a successful career in the United States Air Force. During her last 8
years of service, she served as a professional military education instructor where she
gained experience in curriculum development and training. Although she retired in
1978, she didn't go far and moved to the civilian side of the Air Force. While there, she
soon discovered her passion for personal finances as a Personal Financial
Counselor. Her blend of knowledge and experience in training and finances have
served the community well since 2000. Barbara earned her CFC designation in 2007
and has also designed and taught webinars for AFCPE. She holds a BS in Workforce
Education and works as a freelance photographer in her spare time.

5. Military Home-Buying and Home-
Selling:
General Overview
Barbara O’Neill, Ph.D., CFP®, AFC, CHC
Rutgers Cooperative Extension
oneill@aesop.rutgers.edu

6. Workshop Objectives
▪ Discuss the “nuts and bolts” of the home-
buying and home-selling processes
• Discuss 20 home-buying tips
• Discuss 15 home-selling tips
• Discuss home-buying and home-selling
resources

7. Planning Pays
• Homes are generally largest family purchase
• Unwise purchase/sale decisions can cost thousands of
dollars over time
– Higher interest rate paid than by shopping around
– Poor negotiation strategy for purchase price
– Poor negotiation strategy for services, furnishings
– Home not thoroughly inspected
– Neighborhood not thoroughly vetted
– Other planning errors?

8. Twenty Tips For A
Successful Home
Purchase

9. 1. Study The Housing Market
Carefully
• Housing Values
– Home-buying magazines and realtor ads
– Financial publications
– Web sites (e.g., www.realtor.com, www.homes.com)
• The Economy
– Federal Reserve Bank actions
– Direction of interest rates
• Local Conditions and Issues
– Subscribe to local newspaper if relocating

10. 2. Know What You Can Afford
• Front-End Ratio- PITI payment no > 28% of monthly gross
income (e.g., $5,000 x .28 = $1,400)
• Back-End Ratio- PITI payment+ consumer debts no > 36%
(e.g., $5,000 x .36 = $1,800 - $500 = $1,300)
– http://cgi.money.cnn.com/tools/houseafford/houseafford.html
– http://www.bankrate.com/finance/mortgages/how-much-house-can-you-
buy--1.aspx
• Percentages may be higher on some loans
• Calculate current net worth and cash flow
• Consider household expenses (e.g., child care)
• Request a pre-approval letter (“cash buyer”)

11. 3. Know What You’re Looking For
• Make three lists:
– “Must have” items
– “Like to have” items
– “Don’t want” items
• Keep a house hunting notebook impressions and details about
houses
• Phone App: http://www.business2community.com/mobile-apps/
house-hunting-theres-an-app-for-that-0458738
• Take photos and/or video
• Make several return visits to homes of interest

12. 4. Talk To The Owners
• Try to find out….
– Why owners are moving
– Utility bill history
– Community features, neighborhood, etc.
• Use information in negotiation strategy
• Don’t divulge your thoughts to real estate agent
(agent obligated to tell seller)

13. 5. Choose Your Attorney Early
• Line up attorney well before house search
• Get referrals from:
– real estate agents
– other lawyers
– friends, family, co-workers
• Charge may be hourly rate or flat fee
• Follow “The Rule of Three”

14. 6. Consider Your Purchase Offer
Carefully
• “Buyer’s Market” vs “Seller’s Market”
• Price of comparable homes
• Seller’s “anxiety level” & concessions
• What you feel you can comfortably afford
• Resources (e.g., profit from prior home)
• Negotiate: offer 10% -15% below list price
– Can always raise offer later, if needed
• Down payments, contingencies, furnishings

15. 7. Have a Home Inspection
• Make offer contingent on buyer’s satisfaction
• Can use as leverage for price reduction
• Inspection should include:
– Termites
– Well/septic
– Radon
• Consider requesting escrow account for repairs (for buyer
control over contractor)
• Be sure to accompany home inspector

16. 8. Request a Copy of Appraisal
• Will probably have to request from lender
• Contains wealth of information about home:
– Lot size and square footage
– Value of certain improvements
– Information on comparable homes
• Also request copy of consolidated credit
report and credit score

17. 9. Check on Survey and Title Search
• Especially in times of brisk home sales and
refinancing
• Both services usually ordered by attorney
• Touch base often to make sure work is
being done
• Otherwise, mortgage commitments, credit
checks, etc. can expire

18. 10. Choose Lender Carefully
• Get information on interest rates, points, fees
– Newspaper financial pages
– HSH Associates: http://www.hsh.com/
– Bankrate: http://www.bankrate.com/
• Understand rate lock policy: timing, length
• Compare mortgage types (e.g.,15 vs 30-year)
• Compare points vs interest rates
• Get paperwork in order (e.g., net worth, copies of
bank statements, car title)

19. 11. Ask Lots of Questions and Keep in
Touch With Professionals
• Logistical/procedural questions (e.g., closing date,
pro-rating taxes and utility bills, moving)
• Progress on various steps in the process
• Estimates on closing costs
– By law, “good faith estimate” within 3 days
• Real estate terms and acronyms (e.g., point)
• ANYTHING that you don’t understand

20. 12. Gather Sufficient Liquid Assets
• Amount deposited with the purchase offer
• Remaining down payment
• Mortgage application, credit report, appraisal,
inspection fees
• Points payable before rate lock or at closing
• All closing costs: 3% - 10% of purchase price
• Keep money liquid (cash assets)

21. 13. Read the “Fine Print” and All
Home-Buying Mail
• Many items are extremely “time-sensitive”
• Delays can be costly
• Examples of important mail:
– Interest rate lock-in papers
– Mortgage commitment papers
– Requests for missing documents
– Correspondence about contingency items (e.g., inspection
results)

22. 14. Get Mover’s Estimates-
Shop Around
• Follow “The Rule of Three”
• Ask about all extra charges (e.g., packing boxes)
• Try to add items to a scheduled trip
• Time is money: measure rooms & sketch layouts (cable,
phone jacks, electrical outlets)
• Pack and label boxes by room
• Being prepared will save on hourly rates

23. 15. Consider Buying “Off Season”
• Example: winter, after a blizzard
• Less competition for real estate professional’s
time
• Possibly more “motivated” sellers
– Potential for a lower price
– Potential for other concessions

24. 16. Consider Future Resale
Value of Home
• Location (major roads, neighboring homes)
• Quality of schools
• Cost-effective home improvements
– modern kitchen and bath
– deck, patio, sunroom
– professional landscaping

25. 17. Consider Energy Costs
and Utilities
• Ask seller for copies of recent bills
• Other helpful information:
– Results of an energy audit
– Appliance manuals and energy tags
• Review energy conservation features
– Insulation
– Triple pane windows
– Whole house fans

26. 18. Adjust Tax Withholding
• Mortgage interest and property taxes are
deductible
• May also allow for itemization of other
deductions (e.g., charitable donations)
• Ask employer for W-4 form worksheet
• Calculate withholding allowances based on
– Number of dependents
– Anticipated tax deductions and credits

27. 19. Keep All Housing Receipts
Starting With The Closing
• Keep a file of receipts for all improvements
– Landscaping, garage door opener, new roof
– Adding a room or deck, siding, new furnace
– Finished basement, security system
• Does not include painting or routine maintenance
• Adjusted sales price - cost basis = capital gain
• Capital gain exclusions:$250k/$500k

28. 20. Take The Plunge
• There will never be a “perfect” time to buy
• May be “house poor” initially; later home expenses will be smaller %
of income
• Build reserve fund for emergencies and repairs: 1% of property
value per year: http://www.bankingmyway.com/real-estate/home-equity/
estimating-annual-home-maintenance-costs
• Increase savings and reduce debt
• Don’t “go overboard” on remodeling, furniture, appliances, curtains,
etc.
• Be prepared: plan for things to cost more than you think

29. Other Miscellaneous Tips
• Shop carefully for homeowner’s insurance
– High liability limits
– Replacement cost coverage on contents (personal property)
– Deductible of $500 or more
– May need to prepay 12 months premium at closing
• If buying AND selling, may need interim “bridge” loan
• Points are tax deductible fully on purchase of new home (pro-
rated over loan term on a refinance)
• Consider a buyer’s agent to help negotiate

30. Frequent Homebuyer Regrets
• Initiating a purchase with insufficient funds
• House was expensive to maintain
• House proved to be poorly built
• Decrease in property value
• Overextension so payments are an economic burden
• Home layout not examined thoroughly
• Dissatisfaction with neighborhood
• Not calculating the impact of a long commute
http://realestate.msn.com/june-2013-buying-advice-5-things-homebuyers-may-regret-later
http://www.bankrate.com/finance/video/mortgage/first-time-homebuying-regrets.aspx

31. 15 Tips For a
Successful Home Sale

32. Why People Sell Homes
• To “trade up” to a larger home
• To “trade down” to smaller home, apartment
• To move to a new location (e.g., job change)
• Financial difficulty, divorce, estate sales
• Two people with houses get married
!
• Home selling is marketing:
– Know what buyers want
– Check out your competition

33. 1. Start With a CMA or Appraisal
• Many realtors do CMAs for free to attract
future business
– Compare house features with recent sales
• Appraisal: professional opinion of home value
• Pricing is an inexact science
– Supply and demand, location, timing are key
– “Bidding wars” common in “hot” markets
• May want to set price at 5% - 10% over
amount you think you’ll receive

34. 2. Consider Your Sale Options
• Full commission (usually 6% of sales price)
• Negotiated commission discount
• Low commission sales firms
• Partial FSBO (market yourself; pay 2-3% to broker
who finds buyer)
• FSBO (market and sell home yourself)
• Suggestion: Short (3 month) listing contract

35. 3. Increase Curb Appeal
• First impressions count: buyers may drive by
• Look at home as a buyer: see dollar signs for the cost of
repairs and redecoration
• Ways to increase curb appeal
– Mowed lawn, trimmed hedges, nice landscaping
– Pretty door decoration
– Clean windows, doors, and screens
– No clutter (e.g., old cars, bikes, toys, yard tools)
– No peeling paint, fading trim, loose railings

36. 4. “Groom Your House”
• People are busy; want “move in condition”
• Buyers think clean homes are easy to clean
• Examples of grooming:
– new paint in neutral colors, “Old English” scratched woodwork,
brightness or lights on, clean & uncluttered kitchen, sparkling
bathroom, uncluttered closets, minor repairs (e.g., dripping
faucets, door bells), pleasant aromas, set table
• Should be “show quality” on short notice
• “Depersonalize” house (e.g., photos, awards)

37. 5. Avoid/Control Contact With
Buyers
• Let real estate agent “talk” for you
• If possible, leave the house (unless FSBO)
• Buyers need time in house to review properly
• Keep pets outside; turn off radio and TV
• Easy for sellers “to put foot in mouth”
• Buyers can catch sellers “off guard with
questions” (e.g., side deals for furnishings)
• Don’t go to your open house

38. 6. Review Contract Offers Carefully
• Lowest offer may not be best buyer
• Also consider:
– House sale contingency (when buyer has a home to sell
first)
– Amount of downpayment available
– Buyer’s resources/situation (e.g., salary, loan pre-approval,
eagerness to move)
– Personal characteristics about buyer
• Ideal buyer: a renter with a big bank account

39. 7. Get a Certificate of Occupancy
(CO) if Municipal Law Requires
• Call town clerk or building inspector
• Be prepared to pay a fee
• A CO basically checks for habitability (e.g.,
exposed wires); not minor flaws
• Allow adequate time before closing

40. 8. Negotiate Carefully With Buyers
• Examples of negotiable items:
– Repairs
– Radon remediation
– Sale of fixtures and appliances
• All negotiations should be in writing
• Don’t respond to “trial balloons”
• Instead, say “please make your best offer”

41. 9. Sell The House Before The
Furnishings
• Sales can be lost arguing whether draperies or a
washing machine will stay
• Deflect all questions until buyer presents an offer
listing desired items
• Then respond as desired
• By law, only a few things must stay:
– Built in appliances, oven
– Hanging light fixture so no exposed wires

42. 10. Maintain Good Relations
With Buyer
• Good relationships mean less stress
• You may have to “rent” from your buyer until you are
ready to move
• Problems less likely with small concessions
– Allowing buyer to make visits
– Escrow account for buyer repairs
– Selling/including requested items

43. 11. Be Realistic About “Payback” on
Home Improvements
• Generally, home value shouldn’t be >20% above
surrounding homes
• Landscaping is most important exterior
improvement: can add 7% to 15% to value
• Remodeled kitchen and bath are most important
interior improvements
• Don’t expect payback for routine maintenance
• Pools, hot tubs can detract from value

44. 12. Prepare a Fact Sheet About
Home, Especially if a FSBO
• Recent renovations & maintenance (e.g., roof)
• New appliances and fixtures
• Recent utility costs
• Facts about the neighborhood
• Location of shut-off valves & circuit box
• Property taxes over last 5 to 10 years
• Commuting distances, local shopping, doctors
– Have real estate agent review fact sheet first

45. 13. Consider Financial
Planning Issues
• Capital gains tax if > $250K/$500K exclusion
• Timing of closing if buying another home
• State transfer tax (paid at closing); e.g., NJ
• Investment of proceeds of home sale
• Possible adjustment in tax withholding

46. 14. Practice “The Rule of Three”
When Shopping For Services
• Ask friends, family, co-workers for referrals
• Ask real estate agent for leads on lenders
• Call at least three service providers
– Lawyer
– Lender
– Appraiser
– Inspector (do before putting home on market)
• Make “apples to apples” comparisons

47. 15. “Slow Market” Sales Strategies
• Often cheaper than a delayed sale
• Examples:
– “Decorating allowance” (e.g., $1,000)
– Seller financing or buying down mortgage rate
– Home warranty for buyers
– Make buyer’s payments for 2-3 months
– Pay buyer’s property tax for a quarter
– Pay all or part of buyer’s closing costs
– Give-aways: maid service, lawn service, moving subsidy,
interior decorator, travel, etc.

48. Other Tips
• Can get lawyer referrals through Martindale-Hubbell
Directory (in library)
• Biggest return for $$$ spent: a gallon of paint
• If limited funds, fix the front of house
• Avoid buyer moving in before closing
• Store items to reduce clutter and/or to avoid having
buyers want to include them

49. Things to Look For in a Real
Estate Agent
• Award winning top performer (in newspapers)
• Years of experience
• Full time employment
• Adequate support staff
• Pleasant personality; does not rush decisions
• References from professionals or satisfied customers

50. !
Barbara Lang, DAF, CFC
Homeownership Considerations
for Military Personnel

51. Overview
• VA Home Loan Guarantee
• Comparing Loans
• Applying for a VA Loan Guarantee
• Looking At the Servicemember’s Civil Relief Act
• Potential Implications of Home Ownership
• The Likelihood of Becoming a Landlord

52. VA Home Loan
Guarantee Benefit
• Provided by private lenders
• VA guarantees a portion of the loan
• Types
• Purchase Loans
• Cash Out Refinance loans
• Interest Rate Reduction Refinance Loan (IRRRL)
• Native American Direct Loan (NADL) Program
• Adapted Housing Grants
• Other Resources

53. A Comparison
VA Conventional
• Offers 100% financing • Typically requires 5% down minimum
• Prohibits Principal Mortgage
Insurance
• Typically charges $80 monthly on every
$100K
• Allows some credit problems • Stricter underwriting standards
• Guarantees fixed & adjustable-rates;
however, dictates terms to prevent
abuse
• Adjustable rates not as stringent
• Will not guarantee loans with
prepayment penalties
• May have a paid-in-full clause if the
home is sold
• Assumable • Most are not assumable

54. The Process of Applying
• Obtain a Certificate of Eligibility (COE)
• Servicemembers, Vets, National Guard & Reserve
• Use VA Form 26-1180, Request for Cert of Eligibility online @ eBenefits,
through lender, or by mail
• Choose a lender
• Interest Rate Reduction Refinance Loan (new COE is not required)
• Native American Direct Loan (NADL) Program
• Confirm that your tribal organization participates in the VA direct loan
program
• Obtained through a lender of your choice once you obtain a Certificate
of Eligibility (COE)
Adapted Housing Grants
• You can apply for an SAH or SHA grant via VA Form 26-4555 (PDF)

55. Servicemember’s Civil Relief Act
• Extends relief to Army, AF, Coast Guard, Marine Corps, and Navy service
members on active duty including
• activated reservists, National Guard/Air National Guard, and active-
service commissioned officers of the Public Health Service and
National Oceanic and Atmospheric Administration
• Some provisions extend to spouses
!
• Primary Provisions
• Relief is not always automatic
• Member must affirmatively invoke or request relief
• Six percent cap on interest rates
• Protection against evictions
• Ability to terminate property leases
• Relief from foreclosures and forced sales
!
To ease legal and financial burdens on military personnel and their families
brought on by the demands of active duty.

56. The Military Environment & Home
Ownership
• Reassignments
• Deployments
• Separating/Retiring
• Separation & Divorce
• Adding a Rental Property
• Savings Set-Backs

57. Becoming a Landlord

58. Save Time, Energy & Cash
• Visit an-on base financial counselor
• Check credit
• Assess personal financial well-being
• Save, save, save
• Increase home-buying knowledge
• Improve money management skills

59. Continue the Conversation
• Find the Personal Finance Team online
» Facebook: PersonalFinance4PFMs
» Twitter: #MFLN
• Next webinar May 13: 20 Steps to 7 Figures
» https://learn.extension.org/events/1502
• Virtual Learning Event June 3-5
» Money Behavior: How People Make Financial
Decisions: http://bit.ly/1hBw7wJ