Buying your first home… it’s an exciting milestone!
Daydreaming about the location, square footage, and features is exhilarating, yet it’s important to ensure the steps to the homebuying process are completed in order. With increasing mortgage rates, rising inflation, and high demand for houses, understanding your budget is the most important first step.
We believe this decision should center on your unique situation, wants and needs, and financial readiness. And, to avoid being let down, a budget and pre-approval need be in order before finding the home of your dreams on the internet. Your credit union is here to provide trusted advice on the homebuying process.
Homebuying Readiness Checkup
There are tools that can help you better understand where you stand and what you can afford. We’re pleased to introduce the Homebuying Readiness Checkup.
You’ll answer a few questions and we’ll help you determine a mortgage payment that fits your budget and calculate a home purchase price that you can comfortably afford.
Your Homebuying Checklist
Are you considering buying a new home? Use these questions as a guide to see if it’s the right time to buy:
Are your life goals aligned with buying a home?
There are many advantages to owning a home — a sense of stability, the feeling of accomplishment in owning your own home and building equity, and the benefits of tax deductions. However, it’s not always the best option for everyone. Renting offers predictable monthly expenses without the need for paying for repairs and maintenance and gives you flexibility.
Do you plan to stay in your new home for more than a couple of years?
Real estate is a longer-term investment, particularly in turbulent markets. Real estate experts agree that time in the market is what matters instead of trying to time the market. Staying in your home longer will allow for more equity appreciation so that when it comes time to sell, you can make a profit. If you’re not planning to stay very long, it may be better to rent.
Do you plan to change jobs?
Taking on the commitment of a mortgage requires a steady regular income, plus a new job could mean the need to relocate. It’s important to be consistent in your earnings during the mortgage process to make sure your loan stays on track.
Are you planning to expand your family by getting married or having children?
Consider the space requirements you’ll need for your new additions and the needs and preferences of your partner. You’ll want to ensure that the house you can afford covers your future needs, as well as the present.
Are you ready financially to buy a home?
Importantly, you’ll need to understand what you can reasonably afford for both a down payment and your monthly mortgage based on your financial situation by looking at your income, debt, and savings. Traditionally, home purchasers make a 20% down payment, but that’s not always required. Now, you have many options for the length, rate, and down payment of your mortgage loan. For example, we offer a First-Time Homebuyer Program for those who have not owned a home in the past three years.
How is your credit score looking?
You’ll also need to consider your credit score, which will impact the rate of your loan, and, ultimately, the amount of house you can afford. Plan ahead for any steps you can take to improve your debt-to-income ratio and your score. You can use SavvyMoney from Elements to keep tabs on your score and learn practical ways to improve it.
Finding the Right Loan & Home
Keep in mind that finding the right house at the right price in a competitive market will likely involve some tradeoffs. You may have to compromise on the neighborhood, size of the home, or amenities. Take your time to do your homework, ensure your choice is meeting your needs, and you feel comfortable with your decision and payment.
Again, a great way to generally assess your readiness is with our Homebuying Readiness Checkup. It’s quick and easy — so get started now!