Spring is here, and so is the beginning of the busy real estate season. “For Sale” signs are popping up right along with the sprouting daffodils. If you are a first-time homebuyer, you may feel a little overwhelmed by the process awaiting you. You may wonder what exactly you need to do when buying a house for the first time.
These tips from SAC FCU will help you confidently navigate the process of first-time homebuying.
Four tips for first-timers
Buying a house for the first time requires planning. You will have to consider much more than whether you want hardwood floors or carpeting, or if you like the color of the paint in the living room. You also need to consider monthly mortgage payments, insurance, taxes, utilities, and all the little (and not so little) costs of owning a home.
The more prepared you are, the smoother the process will be.
Tip 1: Determine what you can afford
Most mortgage advice suggests between 25% and 28% of your income can be allocated to housing costs, but many buyers are not comfortable with this high of a percentage.
“Personal priorities, other debt (e.g., student loans) and leftover discretionary income are all factors,” says Alan Stoltenberg, Vice President of Mortgage Lending at SAC FCU.
But remember, just because someone will lend you the money doesn’t mean you should take it all. Work within your own debt comfort level.
Try the SAC FCU mortgage purchase calculators to help you figure out how much you can afford.
Tip 2: Determine monthly housing costs
Your monthly housing costs are the true cost of home ownership, beyond the monthly mortgage payment. These can include, but are not limited to:
- Property taxes
- Homeowners insurance
- Homeowners association fees
Stoltenberg recommends committing to saving additional funds over and above your mortgage payment in a housing account each month. “Life’s little ‘homeowner surprises’ will be less stressful if you have funds reserved to take care of the new furnace or the broken garage door,” he advises.
“Preparedness means you’ll be able to enjoy your ‘home’ without letting your ‘house’ control you,” he offers.
Tip 3: Settle on a down payment amount
A 20% down payment on a conventional loan is the industry ideal. It eliminates the need for private mortgage insurance (PMI), which includes a premium added to the monthly mortgage payment.
Twenty percent may not be feasible for all homebuyers, especially those buying a house for the first time, so SAC offers 10%, 5%, and even 3% programs with modest mortgage insurance premiums. Eligible active duty personnel and veterans can obtain a VA loan through SAC FCU with no down payment.
Tip 4: Find a lender
You’ve searched for the right real estate agent and hunted for your dream house. Don’t forget to research your lender as well. Look for:
- Proven track record of providing accurate information
- Willingness to educate you
A SAC FCU mortgage loan officer can discuss your options with you and help you choose a mortgage loan that’s perfect for your needs.
Home sweet home
Buying a home is exciting, but it can be intimidating. Use these guidelines for buying a house for the first timeand the process won’t seem as daunting.
Have a tip or a question about first-time homebuying? Share it in the comments.
SAC FCU’s 3% conventional loan
SAC FCU’s 3% conventional loan is a great option for buyers who don’t want to make a big down payment. Feature include:
- No upfront mortgage insurance premium is required
- Private mortgage insurance is removed from the loan once you reach 80% loan-to-value
- Loans are available for 30-year terms or less
- There is no prepayment penalty
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