It’s easy to scroll through homebuying websites and picture owning your own home. But how difficult is it really to turn that dream into a reality?

Whether you are ready to apply for a mortgage soon or just curious to know more about the process, the next paragraphs will walk you through everything you need to know about the homebuying process.  

What Can I Afford?

Owning a home is a major financial responsibility. First, take a close look at your finances and ask yourself several key questions:

• What monthly payment can I comfortably afford?
• What fits into my budget?
• Do I have enough savings to make a down payment?
• Do I have the resources to absorb additional expenses related to purchasing a home?

What Is My Credit Score?

Your credit score is an indicator of financial health. A strong credit score is an asset in obtaining a mortgage. You can order a free credit report from the Federal Trade Commission, which will give you an overview of your credit history. Don’t be concerned if it’s not where you want it to be; one of our Financial Counselors can help you set financial goals to improve your credit score. Now is also a great time to consider your savings. Crafting a careful budget and setting savings goals can help build up a down payment.

Mortgage Payment Overview

A mortgage payment and accompanying expenses are actually made up of several different components:

Principal: The balance of your mortgage loan.

Interest: Interest is accrued on your mortgage loan.

Private Mortgage Insurance (PMI): Monthly premium required for down payments under 20%

Property Taxes: Property taxes will differ depending on what county you live in.

Homeowner’s Insurance: This is a separate expense from your mortgage payment, but an essential one. You will need to shop around for homeowner’s insurance yourself.

Learn more mortgage definitions!

Down Payment: How Much Do I Really Need?

Minimum down payment requirements will differ depending on the mortgage loan type. If your down payment is under 20%, you will need to pay PMI until your loan balance reaches 78% of the home’s original appraised value. You should put as much as you can afford into a down payment. Remember, the goal in procuring a mortgage is to get your home paid off.

Unexpected Expenses

Consider other financial aspects of homeownership not directly tied to a mortgage. Many homes require critical upgrades, like replacing an aging furnace or tending to a leaking roof. If your new home has a yard, regular maintenance can add up. If the house belongs to a Homeowner’s Association, regular fees need to be factored into your household budget.

I’m Ready – How Can I Move Forward?

As your trusted financial institution, our goal is to build a solid relationship with you to help you along the mortgage approval process.

The first step is preapproval. During this state, you supply us with financial information such as your paystubs, two years of W2’s and bank statements. We will run your credit and ensure that you can afford the loan. Preapproval usually takes 24 to 48 hours after all materials are received. Once you have been preapproved, you can present a letter to your relator that you are in good financial standing and can move forward with buying a home.

After you are preapproved, you will work with your realtor to visit homes within your price range. If you’ve made an offer and the sellers accept, we will work on finalizing the transaction.

Don’t Do This

Once you have been preapproved, do not take on any new debt. Large deposits and withdrawals will need to be explained. Aim to keep your finances as clean as possible during the home buying process; don’t veer off from your usual routine transactions. Now is not the time to get an auto loan or have your credit run.

When Is the Right Time to Buy?

What if you are financially ready to buy a home, but worry about the unpredictability of the housing market? Acquiring a home is an investment. Currently, demand is high for houses and supply is low. New home owners can feel confident that their investment will steadily increase in value over time.

How We Will Help

Earthmover Credit Union offers a variety of mortgage loan options to best fit your unique needs. Whether you are looking for an urban condo or a rural single-family home, we can help make your dream of owning a home a reality. Our mortgage team is eager to help you on this important financial journey.

Apply for a mortgage now.

Use our Mortgage Payment Calculator.