There are two basic definitions that military members have to be concerned with regarding their status as a resident; the home of record and the legal residence. These two terms are sometimes used interchangeably but they do not mean the same thing and stating the home of record for military purposes has many implications that the state of legal residence does not.

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The Definition Of A Legal Residence

The very term “legal residence” could apply to a specific dwelling, but for our purposes here “legal residence” can be thought of in a similar manner as the “state of legal residence.” We’re concerned here with what state the military member and family reside in.

When you become a resident of a state, you do so because you meet certain requirements; you may be required to have a home address in that state, utility bills addressed to you in that state, some areas may require you get a state driver’s license or ID, require you to register your privately owned vehicle, etc.

In general, you may find that if you can vote in the state you live in, you are a resident of that state. That may sound like an oversimplified explanation of state residency to some but for those who relocate frequently that rule of thumb is a good one.

Why Your State Of Residence Is Important

Your housing allowance and certain other military pay or benefits may be calculated by zip code, and the location of your home will affect those calculations, especially where GI Bill housing allowance benefits are concerned.

But having a zip code isn’t the same as being a legal resident, though paying rent and utilities in that zip code goes a long way toward establishing you as a legal resident of that state.

Being a resident of a state may have certain benefits related to military duty; many state-run veterans homes require state residency or a minimum period of time in the state before they qualify for care.

Certain financial benefits for military members offered by state agencies such as emergency loans, state job preference points, and first-time home buyer grants depend on residency. Some states may waive out-of-state tuition costs for military members and/or family members, but some may not. Establishing residency helps take that question out of the college tuition equation.

The State Of Residence Is Not Necessarily The Home Of Record

Why is this true? Because your legal residence is completely different than the Home Of Record listed in your military service records. Simply put, the military Home Of Record is the state where the military member enlisted or received an officer’s commission.

Your Home Of Record is not the same place as the state Military Entrance Processing Station (MEPS) the service member was sent to; MEPS could be in the same state or a different state depending on where you enlist and when.

Your Home Of Record Matters

One blogger billing themselves as a military finance coach wrote a post discussing the difference between your state of legal residence and the military’s Home Of Record . That blogger writes, “Pretty much the only time your home of record is important is when you leave the military before reaching retirement.”

This is not true.

Your home of record can mean a great deal when it’s time to claim certain state-level veteran benefits. One excellent example? The Illinois Veterans’ Grant, which is offered to those who list Illinois as their home of record AND who return to Illinois within a specified time limit after leaving military service.

You cannot claim the Illinois Veterans’ Grant if you do not meet Illinois residency requirements AND list Illinois as your Home Of Record.

Not all state veteran benefits work this way, but many do and it’s very important to know the difference between the requirement that you be a legal resident of the state and the requirement that a given state is your listed home of record.

Changes To Your Home Of Record

In general, there are few provisions to change your home of record unless there was an error when it was recorded. Generally you may find that altering your home of record (when there was no error) requires a break in military service of one day minimum – which means that you cannot simply change your Home of Record when you re-enlist unless the break in service exists.

Military Spouses And Home Of Record Concerns

Military spouses do not have a Home of Record designation-that is required of the service member only.

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Joe Wallace is a 13-year veteran of the United States Air Force and a former reporter for Air Force Television News

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For active duty military families, home ownership can sometimes feel unthinkable unless retirement is on the horizon and you’re able to finally set down roots. And even then, it might be wise to continue to rent. For civilians, the decision to buy a home is already wrought with tough decisions and brings with it a huge financial commitment – doubly so for military families when you factor in variables like PCS schedule and endless unknowns. But, buying a house while on active duty can be a great investment, it really just comes down to your motivations: You might be ready for a huge yard for your dogs to run wild in, or maybe you see an opportunity to make some extra cash when you eventually move and have to sell, or perhaps you feel that moving in and out of apartments is the equivalent of throwing money away with nothing to show for it.

There is no simple answer for whether or not this will be a good financial decision for you and your family. But, if you’re weighing the pros and cons of home ownership, here are a few things to consider:

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VA Home Loan Eligibility

The U.S. Department of Veterans Affairs offers affordable home loans for military. Once approved by the VA, these loans are provided by private lenders (banks and mortgage companies) and typically do not require a down payment or mortgage insurance because the VA guarantees a portion of the loan against loss, allowing the lender to provide more favorable terms. However, if you’re purchasing your home using the VA Home Loan, keep in mind that the home must be your primary residence and there are conditions on the types of properties buyers can purchase. To learn more about what you can (and can’t) buy using a VA Home Loan, click here.

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Rent vs. Mortgage Payment

In most markets, a mortgage is cheaper outright than renting. Additionally, your basic housing allowance can cover some or all of your mortgage. But, when calculating the monthly costs, keep in mind that maintaining a home can bring with it expenditures that renters don’t have including appliance repairs, home maintenance like broken faucets, lawn care, homeownership association fees, insurance, and more. When something breaks, you can’t simply call your landlord. Is that a responsibility you’re prepared to take on?

However, homeowners do receive tax benefits that renters do not like being able to deduct the interest you pay on your loan from your taxes, which can help offset the monthly costs.

Assess the Local Market

Unless your job is highly specialized, chances are there’s another PCS move in your future. And, unlike renting, you can’t simply tell your landlord you’re leaving and show your orders to break a lease. Think of the property as an investment and ensure that your home is marketable in the long-term. Take stock of the local real estate market and consider what types of homes people are buying – and the average cost of those homes – to assess your ability to move on without substantial investment loss. Additionally, being open to renting the property gives you more options when it is time to move, but again, assess how much you would need to rent the property for and compare that with the average costs in your local market. Renting can also bring the added benefit of earning you additional monthly income.

Many active duty homeowners recommend purchasing a home within a reasonable commute from the nearest military base to increase the probability of being able to rent or sell the property – and fast.

Determine Your Long-Term Priorities

Would you be buying a house in an area you’d want to live in after retirement? Do you enjoy home maintenance? Is being close to family and friends important to you, and how close would you be to them? Does the home have plenty of space for your family to grow? Buying a home is just as much an emotional decision as a financial one, if you can financially afford to buy and the decision checks all of your long-term goals, then it might be the right fit for you.

Homebuying is a complex and carefully-planned process for any family. Leverage your network and talk to other military families you know who purchased a home on active duty to find out what they did right and what they would do differently. Though there is no right answer and no cookie-cutter approach, buying a home can bring independence, pride, and a stability that you wouldn’t expect to have while on active duty.

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Kristen Baker-Geczy is a communications specialist, active duty military spouse, and former MWR marketing coordinator. She was also deployed to Southwest Asia as an Air Force contractor.

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If there’s one thing military families understand it’s that the only constant in military life is constant change. That philosophy extends to frequent moves – not only changing cities but also changing homes.  Because of that, many military families opt to rent instead of buying houses. But, surprisingly, many families who rent don’t know about renters insurance or choose not to have it. Unfortunately, when a disaster strikes, not having renters insurance can be the difference between total devastation and the ability to recover.

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What Is Renters Insurance?

Renters insurance is specifically designed for people who do not own their homes. While your landlord certainly has insurance on the building that you’re dwelling in, that insurance does not extend to what’s inside the home. Renters insurance will allow you to replace everything you own – depending on the type of coverage you have – in the event of a fire, water damage, tornado, vandalism, theft, explosion, or similar disasters. Additionally, most policies also cover medical expenses for guests who are injured on your property.

For those living in government or installation housing, renters insurance may already be included or you may only be covered for specific incidences.

Why Do You Need Renters Insurance?

Just like you purchase automobile or health insurance in case of an emergency, renters insurance protects you in the same way. Imagine returning home from work to find that your entire apartment has been ransacked, and the intruders left nothing of value behind. Renters insurance would allow you to replace what you lost – either cash value or the cost to repair/replace damaged items. It’s a layer of protection for yourself and also provides peace of mind that you won’t be left “high and dry” when a disaster strikes.

What Does Renters Insurance Cover?

As mentioned above, most standard policies cover damage caused by a fire, water damage caused by utilities, vandalism, theft, explosion, and similar disasters out of your control. However, most do not cover damage caused by floods, earthquakes, or mudslides.

A renters insurance policy also has a provision for loss of use in the event that you have to vacate the premises temporarily – so you’ll be reimbursed for a hotel, food, and other related expenses while you wait to go home. Additionally, most plans also include liability coverage which pays for medical expenses in case someone suffers an injury on your property (E.G. If your dog bites the neighbor or someone slips and falls in your kitchen). You may also have credit card/bank forgery coverage which protects you against fraud attempts stemming from a theft. Renters insurance also extends to moving as it covers damages or theft caused by moving companies.

Typically, there are two types of renters insurance policies:

1. Broad form usually encompasses everything mentioned above minus floods, earthquakes, and mudslides. This is the most common and cheapest option.
2. Comprehensive form covers all disasters unless specifically excluded from the policy.

How Much Is Renters Insurance, And Where Can I Purchase It?

Renters insurance can run as low as $12 a month. That’s roughly $150 to replace everything you own in the event of a disaster. Most policies cover $30,000 – $50,000 for apartments and $100,000 for homes with a deductible as low as $500, but check your policy to be sure. Keep in mind that there is also the option to add-on to your policy if you’re worried about something specific like if you live in a flood zone or if you have a customized gaming system.

To purchase, shop around by contacting multiple insurance agents for quotes. You can also start with your current automobile insurance provider and see if they offer a discount for bundling services or check with your landlord for recommendations. To lower the cost even more, ask if the company provides a military discount.

For military families, what we have at home has often been collected from state to state and is all we have to build upon with each move. Don’t take a gamble on your irreplaceable personal possessions. For a monthly cost of less than of a tank of gas, renter’s insurance gives you peace of mind in knowing that if and when a disaster strikes, you’ll be able to rebuild your life.

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Kristen Baker-Geczy is a communications specialist, active duty military spouse, and former MWR marketing coordinator. She was also deployed to Southwest Asia as an Air Force contractor.

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Why you should rent when transitioning out of the military

Transitioning out of the military can be an exciting time. Often, veterans and their families find themselves looking forward to finally putting down roots. This includes embarking on a new career, returning to school, and, of course, becoming a homeowner.

While it’s easy to understand the desire to immediately buy a house upon leaving the military, it may be a more financially stable decision to continue to rent. This is the biggest investment purchase of your life. Here’s why you should wait:

Your entire way of life is changing – your finances, your job, your residency, and the list goes on.

Any life-changing event brings a healthy amount of stress with it. Veterans exiting the military face a variety of stressors. They have to make seemingly endless decisions coming from all angles while deciding what’s next.

Plus, consider that you’ll be going through a major shift in financial stability. You may be working with the Department of Veterans Affairs to file a disability claim, planning for retirement, or facing a tedious job hunt. You are deciding what career field you want to be in or maybe you’ve decided to hold off on returning to the workforce entirely while you go back to school. You’re figuring out where you want to live, which oftentimes means another move. The transition doesn’t only affect you, but also your dependents. Will your spouse return to the workforce or change careers? Where will your children go to school? And it’s worth mentioning that you’re also experiencing a change in daily schedule and social activities. That’s a lot to deal with right off the bat.

Even if you are fortunate enough to secure a job before leaving the military, studies show that you will change jobs and move at least once in the first two years. According to a recent study by the Institute for Veterans and Military Families and VetAdvisor, almost half of post-military veterans stayed in their first job after separating for less than one year. Further, 59 percent are currently living in a different state from their home of record, and 38 percent said their residency had changed since leaving the service. Statistically, the odds are pretty high that you will change jobs and move to a different state at least once upon separation.

As understandable as it is to want to buy a house as soon as possible, there’s a reason Americans say buying a home is one of the most stressful life events in modern life. Most homebuyers aren’t simultaneously changing their careers. For veterans, imagine buying a home in the first place you land only to realize that you don’t like your job or your neighborhood. But now you’re tied to a house and a mortgage and unable to get out from under it. So, what should you do? Consider renting for at least one year, but possibly two while you settle into civilian life. Then, you’ll be better suited to “roll with the punches” and know that you’re making the best decision for you and your family.

Take the process one step at a time. First make the decisions that have to be made, like finding new employment or deciding where you want to move, and then go from there. Don’t let a sense of urgency dictate the most important purchase you ever make and don’t rush it. You have enough to deal with already.

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Kristen Baker-Geczy is a communications specialist, active duty military spouse, and former MWR marketing coordinator. She was also deployed to Southwest Asia as an Air Force contractor.

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What do veterans with VA home loans need to know about natural disasters and how they may affect the ability to maintain the mortgage loan without risk of foreclosure? There are many parts of America that struggle with wildfires, hurricanes, mudslides, tornadoes, and other natural disasters. The Department of Veterans Affairs has policies to help protect VA borrowers and their homes.

VA Mortgage Loan Policy on Foreclosures in General

VA loan policy addresses foreclosure issues with one main aspect emphasized over and over again which is avoidance. The VA official site urges all VA borrowers to contact their lenders at the first sign of financial trouble to get the most options available to avoid loan default and foreclosure.

According to the VA official site, “When a VA-guaranteed home loan becomes delinquent, VA provides supplemental servicing assistance to help cure the default.” The participating VA lender has “the primary responsibility of servicing the loan to resolve the default” according to the VA.

But in circumstances where the lender is “unable to help the borrower” the Department of Veterans Affairs has loan technicians working in the VA’s eight Regional Loan Centers. They “take an active role in interceding with the servicer to explore all options to avoid foreclosure.”

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VA Mortgage Loan Policy on Natural Disasters

VA borrowers affected by natural disasters should know that there is help available in the recovery process. It is not just from the Department of Veterans Affairs or the lender. There are additional resources to prevent foreclosure, help recover the home from damage, or find a replacement home may be available from FEMA, the Small Business Administration, local charitable groups, and military relief societies.

VA policy includes encouragement to seek out these sources of help in addition to whatever is needed from the lender. But it also encourages VA lenders to take specific steps to help those affected by natural disasters.

VA Borrowers in Distress

The VA official site states, “VA encourages servicers of guaranteed loans in disaster areas to extend all possible forbearance to borrowers in distress.” Supplemental loans and/or loan modification options should be explored where appropriate. “It is the loan holder’s responsibility to counsel borrowers concerning assistance that may be available.”

Note that those statements are aimed at lenders who have “borrowers in distress” and the cause of that distress may or may not be a natural disaster. If you are afraid that your VA home loan is threatened by foreclosure action for any reason (not just a disaster), call your lender and ask to receive the counseling you are entitled to about your options to avoid losing your home.

Department of Veterans Affairs policy for homeowners affected by natural disasters includes encouraging lenders to impose a moratorium on foreclosure action in such cases. The official site reminds us that the lender is “ultimately responsible for determining when to initiate foreclosure and complete termination action.” But the VA recommends a 90-day hold on new VA loan foreclosures in the disaster area.

The VA Does Not Control Participating Lenders

As you can tell by the language in the quotes above from the VA official site, the Department of Veterans Affairs does NOT control participating VA lenders. They do not provide direction to them in making choices about which loans must be foreclosed upon and which ones qualify for assistance.

Your VA lender may or may not choose certain actions in the wake of a disaster. But those who do not communicate with the lender in a timely manner after the damage has been done risk missing out on some forms of help available to those who are proactive.

In the same way that the VA does not set or regulate VA loan details such as interest rates or FICO score requirements, it’s the lender’s job to also provide the borrower with the options needed when disaster strikes.

But the borrower must make the effort to contact the lender as soon as possible.

Mortgage Payments Are Still Due After A Natural Disaster Unless You Have Made Other Arrangements with Your VA Lender

VA mortgage loan payments should not be suspended even if your home is completely uninhabitable after a natural disaster. VA loan policy does not include any kind of automatic mortgage payment suspension option after a disaster. Lender standards will play a very important part in what happens next.

The key to understanding how to proceed here is that it may be possible to arrange for suspended payments or make other arrangements with the lender. But the borrower is definitely the one responsible for making contact with the financial institution and making those arrangements.

Don’t let too much time pass before communicating with the lender. Your options for loan modification or other foreclosure avoidance measures are better the sooner you make arrangements. If you miss too many payments, your options may be restricted.

Some borrowers might be tempted to delay their mortgage payment until they have made an insurance settlement. There are two reasons to discuss this approach with your lender.

One, your lender can help you make smart choices about how to proceed with your mortgage and there may be a better option available to you.

Two, borrowers have no guarantee as to the speed of an insurance settlement process. If there are any disputes over your claim or how the insurance company handles your claim, the delay in your settlement money could be longer than you need to avoid running into trouble with your mortgage.

Some Natural Disaster Assistance May Be Dependent on A Federal Disaster Area Declaration

Some home loan options or disaster relief programs are only open to borrowers who live in an area that has been identified as a Federal Major Disaster Area. As soon as you know if your area is named as such, go to the FEMA official site as well as contacting your lender to see what assistance is open to you in such cases.

Special Phone Numbers for VA Borrowers Affected by A Natural Disaster

You can call the Department of Veterans Affairs directly to speak with a loan specialist about post-disaster options by calling 877‐827‐3702.

Disabled veterans who have used the VA Specially Adapted Housing Grant to modify a home later damaged in a natural disaster should call 877‐827‐3702 to check the availability of supplemental grants to assist with repairs to that home.

Reasons to Avoid Foreclosure

Falling behind on a VA home loan for any reason, disaster or not, can lead to foreclosure of the property. This is the case if a VA borrower doesn’t take immediate steps to prevent the loan from becoming delinquent and vulnerable to foreclosure.

Your VA lender can discuss your foreclosure avoidance options with you including loan modification, forgiveness or adjustment of a certain amount of missed payments where applicable, refinancing to catch up and get current on the mortgage, etc. Some may be tempted to let a damaged home slip into foreclosure, but there is an important reason not to do so.

In certain cases where a VA loan closed before January 1, 1990, borrowers can be held liable for the dollar amount of a claim made by the lender to the government because of the foreclosure action.

According to the VA official site, in such cases where VA has to pay a claim to the VA mortgage loan servicer, “the amount of such claim will be a debt you will owe to the Government. If your loan closed on or after January 1, 1990, you will owe the Government in the event of a default if there was fraud, misrepresentation, or bad faith on your part.”

VA Loan Foreclosure Avoidance Options

The following options may be available from your participating lender to help you avoid VA loan default and foreclosure regardless of whether a natural disaster is to blame for the financial difficulty that lead to missing mortgage payments:

• VA Loan Repayment Plans let the borrower pay a regular installment each month plus part of any missed installment payments.
• Special Forbearance where the participating VA lender agrees not to initiate foreclosure to allow time for borrowers to make up the missed mortgage payments.
• VA Home Loan Modification permits the lender to transfer the delinquent payments to the existing loan’s balance and start a new schedule of mortgage payments.

These are the options that permit the borrower to keep the home. In more drastic cases, avoiding foreclosure may be possible only by selling or transferring the property in one of the following ways according to the VA official site:

• Arranging a private sale of the home
• Short sale of the home for an amount below the payoff required
• Deed-in-Lieu of Foreclosure where the VA borrower deeds the property to the servicer rather than a foreclosure.

Important Takeaways for VA Borrowers Affected by Natural Disasters

• VA mortgage loan payments are still due after a disaster unless you have made other arrangements with your lender.
• The VA cannot modify your loan in any way. This is a process the borrower and lender must work together to accomplish.
• There is a difference between an area that has been hit with a natural disaster and such an area that is identified as a Federal Major Disaster Area. If you live in an area with such a designation, additional help may be available from FEMA, HUD, the Small Business Administration, and other agencies.
• Foreclosure avoidance requires you to work with the lender as early as possible when you know you can’t make payments.
• The VA advises lenders to issue a foreclosure moratorium for homes in a disaster area, but it cannot force them to do so.
• There are several options you can try with a participating VA lender to avoid foreclosure. Those options may include loan modification, a supplemental loan to bring you back into good standing on your mortgage. These options may vary depending on the lender, the borrower’s circumstances, and other factors.

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