First-time homebuyers may feel like the odds are against them in trying to purchase a home. But luckily, there is hope. Mountain America Credit Union offers several things to consider before deciding to purchase a home.
Kara Loftus is the Vice President of Mortgage at Mountain America Credit Union. She says there are five things to consider when deciding to buy a home:
The first is determining how soon you plan on buying a house, whether it is three to six months or a year. This is a stepping stone in finding out what needs to be done and how quickly it needs to happen. The second is determining whether you will do your own research or use a real estate agent. It can make a real difference whether or not you have an agent.
Third, you should determine if you have enough money saved to put a downpayment on a home or if you are looking for a loan that can be financed 100%. It is also a good idea to find out your credit score, which makes a difference in determining if you are eligible for a loan. The last thing to take into consideration is finding out what price range you qualify for or what you are comfortable paying in a mortgage payment.
Talking with a mortgage loan officer can also help answer all of these questions and determine what your debt-to-income ratio is and how much you qualify for in a mortgage payment. They can also determine what price range you should be looking in for homes.
“Getting pre-approved, knowing what you qualify for, what you’re comfortable in making a monthly payment: those items are very important. So check with a loan officer and make sure you do those things before you get out and start looking so it doesn’t break your heart, and then you can buy your dream home.”
One myth about homebuying is those home buyers must pay a real estate agent commission when buying a home. Loftus says that is not the case; the commission for an agent is paid through a seller’s proceeds. Another homebuying myth is there is putting a minimum of 20% down on a home. The Federal Housing Administration (FHA) requires anywhere from a 3-5% down. There are also programs available for first-time homebuyers that allow them to finance a home at 100%, and in some cases, they may not even need to make a down payment.
If you are a first-time homebuyer, using a real estate agent is a great resource because they can search for specific homes tailored for the buyer to narrow down that search and give them a list of homes that meet their needs.
Utilizing a mortgage loan officer is a helpful resource. Loan officers can find out what programs are available to buyers and can determine if they need a down payment and how much it would be. A loan officer also pulls your credit to determine what you qualify for. Talking to a loan officer should be done when you are looking to buy a house within the next six months.
Loftus also mentions that if you are looking to buy a home and only plan to live there for a short time, you may lose equity with the home since rates are on the rise and home values have increased over the past few years. This means that if you purchase a home now, the value may stabilize or decrease over time. “If you’re looking to buy a home, plant your roots, and stay there a long time, now is a great time to purchase.”
If you are looking for a home but are not quite ready, keep an eye on your credit report to make sure payments are made on time and look into neighborhoods you are interested in. This helps give a sense of what homes are going for in that area to determine if you are able to afford a home there. If you are trying to get a loan with a down payment, start saving now by putting a little money away from each check into a savings account.
Visit Mountain American Credit Union in Billings for additional services and homebuying resources.