Are you starting to think about buying a home? Whether a new home is on the horizon or you’re already knee-deep in the home buying process, Patriot has some home-buying tips for you to help the process go as smoothly as possible.
1. Start Saving for a Down Payment Early
While there are financing options that require little or no down payment, having a larger down payment can help lessen or even eliminate some monthly costs – like private mortgage insurance. Use a down payment calculator to help you come up with a goal amount.
2. Know What Types of Mortgage Options are Out There
There are lots of mortgage financing options available, especially if you are a first-time home buyer. These options include:
- Conventional Mortgage – A fixed rate home loan with terms ranging from 10-30 years and allows you to remove private mortgage insurance after you reach 80% loan to value.
- Adjustable Rate Mortgage (ARM) – A mortgage that starts with a fixed rate for a set number of years but then adjusts to a variable rate for the remainder of the loan.
- Federal Housing Administration (FHA) Insured Mortgages – Popular for first time home buyers. Credit requirements are generally more lenient than a conventional loan.
- United States Department of Agriculture (USDA) Guaranteed Mortgage Loan – No money down, 100% financing loan, generally with more lenient credit requirements and a competitive interest rate.
- Veterans’ Administration (VA) Guaranteed Mortgage – Requires no down payment and offers competitive interest rates to help returning service members purchase homes.
3. Determine What You Can Afford
Make sure you know what price range will give you a payment you’re comfortable with before you start looking for your dream home. Use a mortgage affordability calculator to determine how much you can spend comfortably.
4. Check Your Credit and Pause New Activity
One of the biggest factors in determining your eligibility and interest rate on a mortgage loan is your credit score. Focus on paying down debts, making payments on time, and avoid opening any new credit accounts.
5. Hire a Buyer’s Agent
Did you know that buyer’s agents are free to you? The seller negotiates the commission that the agents receive before the house is listed. If you don’t hire a buyer’s agent, the entire commission goes to the selling agent, which is great for them, but leaves your interests unprotected. A buyer’s agent will help you navigate the home buying process and can advocate for your interests during the transaction.
6. Get Pre-Qualified
Getting pre-qualified before you start looking at houses is a great place to start. This helps determine what purchase price will leave you with an affordable payment and shows a seller that you’re serious and qualify for the loan to purchase the home.
7. Research the Area
Be sure you research nearby schools – even if you don’t have children, school districts can affect home values. Take a drive through the neighborhood at different times of the day to observe what the traffic and noise levels are like. Review local crime and safety statistics and determine how close you are to emergency responders, hospitals, pharmacies, and other points of interest.
8. Remember to Budget for Closing Costs
Closing costs are generally about 2%-5% of your loan amount, so you will need to budget for these too. You can also ask the seller to cover some of these costs, but just like a down payment, saving ahead of time puts you in a better position during negotiations.
Get Pre-Approved for a Home Loan at Patriot Federal Credit Union
If you’re in the market to buy a home, call 717-709-2580 or stop into one of our branches in Chambersburg, PA, Hagerstown, MD, or Waynesboro, PA to chat with one of our experienced and friendly mortgage consultants. Getting pre-qualified is one of the first steps to buying a home and we are here to help you every step of the way!
The content provided in this publication is for informational purposes only. Nothing stated is to be construed as financial or legal advice. Patriot Federal Credit Union does not endorse any third parties, including but not limited to, referenced individuals, companies, organizations, products, blogs, or websites. Patriot Federal Credit Union does not warrant any advice provided by third parties. Patriot Federal Credit Union does not guarantee the accuracy or completeness of the information provided by third parties. Patriot Federal Credit Union recommends that you seek the advice of a qualified financial, tax, legal, or other professional if you have questions.