Are you thinking about buying your first home or another property for rental income? Members First is here to lend a helping hand with the home-buying process from advice to financing. Whether you’re in the initial states of the home-buying process (i.e. thinking about purchasing a house, but aren’t sure you’re ready yet) or are ready to begin shopping, here are a few questions to ask yourself to make sure you’re on the road to success to buy your new home.
Are your finances in order?
Buying a house is a big commitment and it may be the biggest financial decision you’ll ever make. Before you start falling in love with the condo downtown or the sweet house with the wraparound porch at the beach, you want to make sure you’re financially ready. Do you have other financial goals or commitments that may get in the way of buying your home? Using a budgeting calculator and mortgage repayment calculator can help you determine your budget and what home you can afford.
Once you’ve done that, check your credit score and start paying down debts. A higher credit score and low debt to income ratio will help you qualify for a lower mortgage interest rate. Plus, knowing your score will help you determine if you should take the time to build-up your credit and hold-off on home ownership for a while.
If you have questions or concerns, make use of your credit union. Talk to one of our knowledgeable financial service representatives. Give us a call at (850) 434-2211 or stop by a branch near you.
Do you have a plan for the down payment?
Once you’ve determined what you can afford, you can start to figure out how much you want to save for a down payment. Although, 20% down payments are ideal, you can put down less. While a smaller down payment requires less money up-front, it means you’ll have to pay mortgage insurance. The type of home loan you use can impact the minimum down payment requirement.
Apart from your down payment, you’ll want to set aside money for closing costs. Closing costs generally run from 2% - 5% of the total cost of your loan. It is also a good idea to have an emergency fund in case your home needs unexpected repairs. When purchasing your home, you may be able to negotiate payment of closing costs and repairs with the seller, but since this is not guaranteed, it’s a good idea to have these funds set aside just in case.
What are your must haves in a home?
Create a wish list. Come up with a list of must-haves and nice-to-haves. Do you want a backyard? Do you want to be close to amenities like coffee shops, boutiques, or green spaces? If you have children or plan to have children, is there a particular school you want them to go to? Do you need a large kitchen for cooking or entertaining? Are you handy or is getting a move-in-ready home non-negotiable? All these things can impact the cost of your home and help you determine what you’re willing to compromise on during the home-buying process.
Ready to purchase your new home?
Learning about home loans will help you find the right mortgage for you. Learn the advantages and drawbacks of Conventional loans, FHA loans, VA loans, and more. Plus, choosing the right home loan can boost your chances of approval and save you money in the long run.
Once you’ve done your research and are ready to get pre-qualified or get a mortgage, start collecting paperwork you’ll need for your mortgage like:
- W-2 forms from the past two years (you may need more, if you’ve changed employers).
- Pay stubs from the past 30-60 days.
- Proof of other sources of income (including documentation of gift money).
- Federal income tax returns for the past two years.
- Recent bank statements.
- Details on long-term debts like auto or student loans.
- ID and Social Security Number.
We understand the process can be confusing or frustrating. That’s why we’re here to lend a helping hand with financial questions and concerns you may have. Give us a call at (850) 434-2211 or stop by a branch near you. If you’re ready, get pre-qualified today.
APR = Annual Percentage Rate. All loans are subject to credit approval. Rates and terms are based on individual credit worthiness. Terms and conditions apply. NCUA Insured. Equal Housing Lender. NMLS# 405711.
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