Buying a home can be one of the most important and stressful experiences one can have. You want to get the perfect 
house at the best price, but do you know the difference between preapproval versus prequalification or the importance of the house’s location or having a good agent? The following list will help you be more informed and prepared when entering the real estate scene.
- Know how much you can afford. The general guideline is to use the 28/36 rule which suggest that your monthly mortgage payment (including mortgage, principal and interest, property taxes and home insurance) should be no more than 28% of your gross monthly income. The second part of the rule suggests that your total monthly debt obligations (mortgage, credit cards, student loans, car payment, etc…) should be no more than 36% of your gross income.
- Get Pre-Approved First! Pre-approval means you have formally applied for the mortgage and paid the application fee to allow the credit union to determine what amount you are eligible to receive. This does not mean you are making the final commitment (verification of your information, salary and a professional appraisal of the house is required before finalization of agreement), it allows you to know your limits in your house search and negotiations.
- Choosing a local agent who is familiar with your targeted area (i.e. what are the area schools like, what is the neighborhood like, etc…) can simplify and put you on the fast track to finding your future home, however you need to make sure that the agent listens to your needs and wants so he or she is more adept to help you find what you want. It is also important for the agent to be a member of the MLS (multiple listing service), giving you access to a database of homes in the area, often with pictures and lots of details.
- Know the location of the house you choose. You are not only buying a house but a piece of a neighborhood. Know the atmosphere and what traffic is like at different times of the day. Drive around and get a feel of the area and neighbors so that you are truly familiar with where you might live.
- When making an offer, know the market value, the house condition, the seller’s motivation and most importantly, know how much you can spend and stick to it. Don’t make a an impulsive decision that will remind you with every mortgage check you write, but instead weigh all of your options carefully to choose the best house for you and your family.
- Always make your purchase contingent on the result of a professional house inspection, obtaining financing and receiving an appraisal. There may be other provisions you want to include (i.e. appliances included, etc…), but these are the basics that should be included in all purchasing contracts.
- Decide whether you want an adjustable or fixed interest rate and whether your payments will span 15 or 30 years. You can estimate your monthly payments for all those options with your credit union.
- ALWAYS, ALWAYS, ALWAYS have a house inspection done by a professional inspector.
Good Luck with the purchase of your new home! If you have any questions concerning a first mortgage, please contact Hampton Roads Educators’ Credit Union and we will refer you to our partner, Member Options (http://memberoptions.mortgagewebcenter.com/).
If you have any questions concerning a Second Mortgage or a Home Equity Line of Credit, please contact the Loan Department, extension 111.
