Strategies that will help you through the purchase process
Imagine struggling to unlock your front door at night. You fumble with several keys in the dark but can’t gain entry. Purchasing a home can feel as frustrating or worse. The truth is, successful homeowners have eight effective keys—the activities listed here—that will help you open the door to homeownership.
1. MEET WITH A TRUSTED, EDUCATED REALTOR
Choose a realtor, not just a real estate agent. These committed professionals are active members of the National Association of Realtors (NAR), who provide the utmost in savings and security for their clients. They abide by NAR’s Code of Ethics and Professional Standards. Required periodic training assures their up-to-date legal and financial expertise. A realtor can give you solid information on expected costs that will help you prepare your finances.
2. MANAGE YOUR MONEY BY CONQUERING DEBT AND BEING PREPARED
Now is the time to think of your money as a tool for achieving home ownership.* Aim any disposable income toward settling debts rather than adding to them. Of course, student loan debt has become the biggest hurdle for many new homebuyers. To ease this burden, contact
your student loan servicer to discuss federal student loan forgiveness, cancellation or discharge. Any way that you can control, reduce or even eliminate your debt will help you move closer to homeownership.* Also, saving money in advance for unplanned events like car trouble or medical emergencies will help you reach your goal of homeownership with fewer detours along the way. Once debts are controlled, and emergencies pose less of a financial threat, you’re ready to save for actual purchase costs.
3. BUILD A DOWN PAYMENT AND CLOSING COST FUND
Even a low 3% down payment on a $200,000 loan will cost $6,000. No matter the size of your loan, there will be additional costs in fees, which you should also be prepared to pay. Your closing costs, which will be due the final day of escrow, will likely include appraisal fees, title insurance, homeowner’s insurance and mortgage insurance. Ask your realtor for a clear picture of all such expenses. Then, build your fund accordingly, so you will be ready to finalize the purchase.
4. REVIEW YOUR CREDIT REPORT
Every homebuyer should request a free copy of their credit report
from each of the three credit bureaus at www.annualcreditreport.com
— Experian, Equifax and TransUnion. Review each carefully and be sure to dispute any errors that could lower your score. Remember, lenders will use your credit score to determine how much of a financial commitment they require before approving a home loan. Your ability to qualify for a loan or even some loan assistance programs will be based on your credit history. Don’t panic if your credit score is lower than 580. Costs and rules can vary, so be sure to contact your local HFCU Branch to get connected with a Certified Financial Counselor for guidance on how to improve your credit score.
5. RESEARCH FIRST-TIME HOMEBUYER (FTHB) PROGRAMS IN YOUR AREA
FTHB programs can help with everything from down payment assistance to tax credits and closing costs. The Department of Housing and Urban Development (HUD) offers several programs with benefits, such as down payment assistance, lower interest rates and easier credit requirements. You may qualify for FHA, USDA or a VA loan. HUD’s Good Neighbor Next Door program works with teachers and first-responders. Some nonprofits work with qualifying low-income homebuyers. Check the HUD website
for information on regional availability. Then visit your city and county websites for offers. And be sure to check with your Honda FCU Advisor about our first home mortgages
6. APPLY THE POWER OF A HONDA FCU PREAPPROVAL
A preapproved loan can speed up the whole process. It will empower you to plan for an affordable home loan that establishes concrete goals for your income and savings. Most important, your established creditworthiness will make you more attractive to sellers. Please contact your local Honda FCU Mortgage Representative to get preapproved today!
7. CREATE A SENSIBLE BUDGET AND FOLLOW IT
This Budget Blueprint tool
is one of your most valuable keys, because it will help you control where your money goes. A clear, written budget will help you track your flow of income, savings and expenses. A Honda FCU Certified Financial Counselor could be your first step toward controlling your cash flow, please contact us when you are ready!
8. KNOW THE CONTINUING COSTS OF HOMEOWNERSHIP
After the sale, there will be additional ongoing costs, such as HOA dues and property taxes. These should be clear, so you can budget for them. If you have a variable-rate mortgage, track the rates plus any balloon payments. Consider new investments, such as tax preparation, which may balance out as they maximize the tax benefits of your new home. This is also an important time to sit down with a licensed insurance agent to protect your investment.