Congratulations! You're considering buying your first home – an exciting milestone. While the process might seem daunting, understanding the key steps empowers you to make informed decisions and find your perfect place. At City & County Credit Union, we're here to guide you every step of the way.
Understand the Key Homebuying Costs
Before diving in, it's crucial to understand the financial aspects of homeownership. Here's a breakdown of the key costs:
- Down Payment: Typically ranges from 10-20% of the purchase price. A larger down payment translates to lower monthly mortgage payments and less risk of private mortgage insurance (PMI).
- Mortgage: The loan used to finance your home purchase. The cost depends on the loan amount, interest rates, and term. Shop around for the best terms that fit your budget.
- Closing Costs: These include expenses like appraisals, inspections, and title fees. Factor these into your overall homebuying budget.
Pro tip: Estimate potential mortgage payments, down payment needs, and closing costs with our user-friendly online mortgage calculator. 
Meet Mortgage Lender Requirements
Once you're familiar with the financial side, let's explore how to meet mortgage lender requirements. This ensures you can comfortably manage payments and secure a favorable loan. Here's what they typically focus on:
- Debt-to-Income Ratio (DTI): This ratio compares your total monthly debt payments (including the proposed mortgage) to your gross monthly income. A DTI under 36% generally bodes well for loan approval.
- Housing Expense Ratio (HER): This ratio focuses on housing costs specifically. Ideally, your monthly housing payment (mortgage, property taxes, and homeowners insurance) should be under 28% of your gross monthly income.
- Credit History: Lenders will review your credit report, so it's wise to check for errors or areas for improvement beforehand. A strong credit score increases your chances of securing a favorable loan.
Streamline the Process: Tips for a Smooth Purchase
Now that you understand the financial expectations and lender requirements, here are some practical steps that streamline the home-buying journey:- Get Pre-Approved: Taking this crucial first step means you can act quickly when you find the perfect home.
- Pro tip: CCCU offers online quick and easy pre-approval options that give you a clear idea of your buying power and expedite the offer process when you find your dream home!
- Find a Trustworthy Agent: Interview real estate agents to find one you trust. Buyer's agents represent your best interests.
- Make a Strong Offer: Work with your agent to craft a competitive offer by understanding local home values.
- Inspect Thoroughly: Closely examine the property and negotiate any needed repairs to avoid unwanted surprises.
- Plan for Hidden Costs: Don't forget expenses like moving fees and utility hookups when creating your budget.
Ready To Make Your Dream a Reality?
At City & County Credit Union, we're committed to guiding you through every step of your homeownership journey. We offer a variety of mortgage options, helpful resources, and expert advice to empower you to achieve your goals.
