So, you’re saving for your first home – congratulations! As someone currently knee-deep in the process of readying themselves for the journey of buying a home in the next year, I can relate. There is a lot to consider, and everyone has the advice to offer. Luckily, the lending team at Service Credit Union is chock full of smart folks and helps first-time home buyers like us every single day. In this blog, we’ll touch on some of the more important things to remember as you approach this major (and exciting!) milestone.
Set a budget
This may seem like an obvious place to start, but it might be among the most crucial tips you’ll read here today. With the advent of social media and real estate apps, it’s never been simpler to peruse potential dream homes from your couch. It can be just as easy, however, to get sucked into the daydream of a place far outside of your price range. For this reason, we recommend a deep dive into your fixed expenses, monthly income, savings, and added costs of homeownership. From there, you can begin to paint the picture of how much home you can afford and what those payments could look like.
Check your credit report
Another important step in the savings process involves getting a copy of your free annual credit report. Applying for a mortgage requires a ton of paperwork, and a single missed payment in your past can mean the difference between qualification and rejection. Credit reports can be missing information or be outdated, and you don’t want to take a chance on missing a mistake and having your lender see it before you do. Having a better handle on your credit can also lead you in the right direction to take potentially helpful actions like paying down a credit card or opening a new type of credit account to increase your score.
Ask for Assistance
As we’ve discussed, saving to buy a home on your own is hard work – and it takes a long time. Add in the fact that home values are seemingly always on the rise, and it might seem like you’re trying to hit a moving target when it comes to being ready to make a down payment. Luckily, there are over 2,500 down payment assistance programs available nationwide at the federal, state, and local levels. These can be based on income and occupation (the military is a plus!) among other variables and can be used for the down payment and/or closing costs. When you meet with your loan officer to get pre-approved, ask about these opportunities and investigate what might exist in your area – they can aid your quest to make a home purchase more affordable.
As exciting as it is to think about getting the keys to your future home as soon as possible, you’ll be happier if it doesn’t come at the expense of everything else in your life. That is, you want to put yourself in a position financially where you’re able to afford your monthly mortgage and still enjoy social outings, shopping trips, and the other things you might enjoy now. Try to save more than you think you’ll need and budget for as high of a down payment as you can – it’ll pay off, and future you will be grateful.
Service Credit Union offers several tools to help you get started on your home buying journeys, such as a payment calculator, first-time buyer resources, and latest rates. Our EverFi and Greenpath financial wellness education programs also feature informative and interactive modules that can help you better prepare and understand the process.