Pre-qualification. Adjustable rates. Closing costs. At times, purchasing your first new home may feel like learning a new language, but by breaking the process into small steps and working with experienced professionals, you can make your dreams of home ownership a reality. Check out our tips below to help demystify the first-time home buying experience!
Establish positive credit.
Your credit is your reputation as a borrower, and that reputation goes a long way when buying a home. Before you begin your search, you can pull a free credit report from each of the three major credit bureaus to understand what is on your credit report. This will also help you determine if there are any problem areas that may come up later on, and will also help you ensure that the information is accurate. Your score is calculated based on a variety of factors, but the best way to build positive credit is to make at least the minimum payment and pay your bills on time every time.
Get pre-qualified or pre-approved.
The pre-qualification and pre-approval processes are important steps in helping you determine your best options for what you can afford and what options are available to you. While pre-qualification is a good way to get your feet wet and discuss your option at no risk, it is only the preliminary round of starting the mortgage approval process. Meanwhile, pre-approval requires a credit and background check, and is the conditional commitment from your lender on how large of a mortgage you can get. Getting pre-approved for a mortgage gives you an advantage over other buyers and shows sellers that you’re a good credit risk. For an easy way to calculate how much home you can afford, click here.
Know your financing options.
When shopping around for your mortgage, know the different types of financing options available to you. Fixed-rate mortgages allow you to know exactly what you’ll be paying from month to month, while adjustable-rate mortgages change over time. At Addition Financial, members can make their dreams of home ownership a reality with the credit union’s specialized First-Time Homebuyer loan. This product is a fixed-rate 30-year term that requires just 3% down payment and offers low closing costs. Homebuyers should look for a lender that doesn’t charge pre-payment penalties – that way, if you’re able to put extra money toward your mortgage to pay it earlier, you have the ability to do so. Consider financing with a credit union like Addition Financial. Because credit unions are not-for-profit, they tend to have lower interest rates and lower fees, while still offering the same products and services as traditional banks.
Find an experienced real estate agent.
Look for someone you can trust to have your best interests at heart. When in doubt, you can ask for recommendations from your lender. Through Addition Financial’s HomeAdvantage™ Program, homebuyers can connect with licensed real estate agents who can help them through every step of the process. Homebuyers also earn a cash rebate to use at closing or to help refurbish their new home, and have access to search MLS listings, schools, neighborhoods and home values.
Ultimately, it’s important for homebuyers to build positive relationships with their lenders and real estate agents in order to make the process as smooth as possible. For more helpful resources, webinars, and other online tools, visit Addition Financial’s blog.
Valerie Moses is a Senior Relationship Manager at Addition Financial Credit Union, where she manages public relations and various Central Florida partnerships. When she is not at a community event or cheering on the UCF Knights, she can be found at her lifestyle and travel blog, Wellness & Wanderlust.
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