Dear Dave: I am approaching a transition phase in my life. I will be leaving the army soon and have been evaluating my life situation once I get out.
My parents said I could live with them for a while, but I’m not sure it will work out.
I’ve done a bit of research on rent versus buying a home, but I understand you hate VA loans.
Can you clarify why you feel this way and give some advice for a person in my situation? – Tyler
Dear Tyler: Hate may be a strong word for how I feel about VA loans, but there are a few things to know about them.
Number one, VA loans tend to be more expensive, with the interest rate and all fees, than FHA or conventional loans.
Number two, the reason most people lean toward a VA loan is that they can get a home with no down payment.
But if you are trying to buy a home with no startup money, it means you are too broke to buy a home!
When you buy a house and you have no money in the bank, that house will be a curse rather than a blessing.
What happens if you buy a house this way and the air conditioning turns off next week?
What if your car needs a new transmission next month? Most people who find themselves in situations like this start piling up debt to fix things, and that’s not a smart response.
VA loans and other “no down payment” home loans allow you to buy a home from a position of financial weakness rather than a position of financial strength. Don’t get me wrong, I want you to own a home one day. I just don’t want the house, and a bunch of other debt piling up on top, to be yours.
My advice is to rent a decent, affordable place for a while and focus on getting your new life and career off the ground while saving some money. You might even consider a roommate situation for a while to help cut costs. But you don’t have to be buying a home right now.
Good luck and God bless you, Tyler.
And thank you for your service to our country. – Dave
Dave Ramsey is seven times the number one national selling author, personal finance expert and host of The Ramsey Show, heard by more than 18 million listeners each week. He has appeared on Good Morning America, CBS This Morning, Today Show, Fox News, CNN, Fox Business, and many more. Since 1992, Dave has helped people regain control of their money, build wealth, and improve their lives. He also serves as CEO of Ramsey Solutions.