Buying Your Home

There is no Place Like Home                        First Mortgage

CME CU understands buying your first or looking for your next home is a big decision. With advice and services, we are here to help during this exciting time and give you the confidence you will need to make the right decision for you and your family.

The First-Time Homebuyer

Buying a home remains one of the American dreams. As a first-time buyer, you have access to programs, tax breaks, and federally backed loans. A first-time homebuyer is someone who:

• Is an individual who has not owned a principal residence for three years. If you’ve owned a home but your spouse has not, then you can purchase a place together as first-time homebuyers.
• Is a single parent who has only owned a home with a former spouse while married.

Before You Buy: 5 Questions to Ask Yourself

1. How's my financial health?
   
   Before clicking through pages of online listings or falling in love with your dream home, take a moment to review your finances. This will help prepare you for buying and the ongoing cost of owning your home. Take a look at these areas to help assess your financial health:
   1. Your savings. Take a look at your savings and saving habits. Having six months of living expenses saved is a good measure. When you buy a home, there will be costs including the down payment and closing costs. Having these funds set aside will help as you become a homeowner.
   2. Review your spending. It helps to know how much and where you are spending every month. This will help you know how much you can reasonably allocate for a mortgage payment. Be as detailed as possible, account for utilities, food, car maintenance and payments, student debt, clothing, kids' activities, entertainment, retirement savings, regular savings, and any miscellaneous items.
   3. Check your credit. To qualify for a home loan, you'll need good credit, a history of paying your bills on time, and a maximum debt-to-income (DTI) ratio of 43%
       
2. Which type of home will best suit your needs?
   
   There are many choices you will have when purchasing a residential property. A traditional single-family home, duplex, townhouse/condo or a multi-family building are just a few you have. Each has its own pros and cons, depending on your homeownership goals. Give some thought and decide early on which property type works best for your needs and financial goals.
    
3. Which specific features do you want your ideal home to have?
   
   While it's good to be flexible, you are making one of the biggest purchase of your life, and you deserve to make a choice that fits your needs and wants. Make a list of your basic desires, like size and neighborhood, all the way down to smaller details like bathroom layout and a kitchen fitted with durable appliances.
    
4. How much mortgage do you qualify for?
   
   Before you start shopping, it is important to get an idea of how much of a home you can afford. A lender bases this on how much income and debt you have, and how long you've been at your current job. Getting preapproved for a loan before placing an offer on a home is a great step to take. Sellers look at offers from buyers with a mortgage preapproval as a stronger buyer.
    
5. Who will help you find a home and guide you through the purchase?
   
   A real estate agent will help you locate homes that meet your needs and are in your price range, then meet with you to view those homes. Once you've chosen a home to buy, these professionals can assist you in negotiating the entire purchase process, including making an offer, getting a loan, and completing paperwork.

Find a home

Now the fun starts, finding your home. There are lots of places to look so make sure you take full advantage of the options you have to find your home including a buyers real estate agent, searching for listings online, and driving around the neighborhoods you are interested in. It you are a first-time homebuyer, look for a home you can add value to and give you a chance to improve the equity in your home as you make your home improvements.

Consider your financing options and secure financing

Whether you are buying or refinancing you have a variety of choices to finance your home and first-time home buyers have even more options that will help you get into a home. The FHA or Federal Housing Authority offers programs geared towards home-owning novices and other first-time homebuyer programs offer down payments as low as 3% to 5% (vs. the standard 20%).

Make an offer

Once you find your home its time to make an offer. Your real estate agent will help you decide how much money you might want to offer, along with the conditions you want to ask for. Your agent will present your offer to the seller who will either accept it or issue their counter offer. You can then accept or continue to go back and forth until you both reach an agreed price.

Once you reach an agreement, you'll make a good-faith deposit and the process then transitions into escrow. Escrow is a short period of time (often about 30 days) during which the seller takes the house off the market with the contractual expectation that you will buy it.

Home Inspection

Even if the home you plan to purchase appears to be flawless, there's no substitute for having a trained professional do a home inspection to qualify the quality, safety, and overall condition of your potential new home. Bottom line is you don't want find out when you own the home there are a lot of unexpected repairs that need to be done. Most offers are contingent on the home inspection and if serious defects are identified, you'll generally be able to rescind your offer and get your deposit back. It also gives you leverage to have the seller make the repairs or reduce the selling price.

Close on your Property

Once the price is worked out and the inspection comes back with no problems, you should be ready to close. Closing involves signing the purchase and mortgage paperwork that say you own the property. You and your lender will work through the final stages of your purchase including a home appraisal a title search to make sure that no one other than the seller has a claim to the property and completing the mortgage paperwork. The cost for closing may include loan-origination fees, title insurance, surveys, taxes, and credit-report charges. Your lender would have disclosed these to you when you applied for your loan and became prequalified.

Congratulations Homeowner!

You have signed the papers, paid the movers, and your new place is starting to feel like home. With home ownership comes major unexpected expenses, such as replacing the roof or getting a new water heater. Start an emergency fund for your home so that you won't be caught off-guard when these costs inevitably arise. Regular maintenance can decrease your repair costs by allowing problems to be fixed when they are small and manageable.