What You Should Know Before Buying a Home

May 20, 2024, 16:00 PM

Buying a home can be exciting and stress-free! Our guide gives you the essentials, from budgeting to making an offer. Discover the best mortgage options and how Hughes can help you every step of the way.

You’re scrolling through real estate apps, daydreaming about your future home. Maybe it’s a charming house with a backyard perfect for weekend barbecues, or perhaps a sleek downtown condo close to all your favorite spots like Hotel Congress and the Fox Theatre. Did you know that the average first-time homebuyer is 36 years old and spends around three months to a year finding the perfect place? 

Buying a home is a big deal and can feel as exhilarating and nerve-wracking as planning a wedding or prepping for a big move. Don’t worry—we’ve got you covered. This guide will break down everything you need to know, with practical tips and relatable advice, to help you navigate the journey to homeownership with confidence.

Step 1: Assess Your Financial Situation

Before you even start looking at homes, you need to take a close look at your finances. This involves evaluating your income, debts, savings, and credit score. Here's what you need to do:

Check Your Credit Score

Your credit score plays a crucial role in determining the mortgage interest rate you'll qualify for. A higher score can help you get a lower rate, which can save you thousands of dollars over the life of your loan. You can check your credit score for free every 12 months from each credit reporting agency at annualcreditreport.com.

Calculate Your Budget

Determine how much you can afford to spend on a home. This includes not just the purchase price, but also ongoing costs like property taxes, homeowners insurance, and maintenance. Hughes Federal Credit Union offers useful mortgage calculators to help you understand your financial capacity:

Save for a Down Payment

Most lenders require a down payment, which can range from 3% to 20% of the home's purchase price. The larger your down payment, the less you'll need to borrow, which can lower your monthly mortgage payments.

Step 2: Get Pre-Qualified for a Mortgage

Getting pre-qualified for a mortgage gives you a clear picture of how much you can borrow and shows sellers that you are a serious buyer. Hughes Federal Credit Union offers a straightforward pre-qualification process that can help you understand your borrowing power and streamline your home search.

Step 3: Research and Choose the Right Mortgage

There are various types of mortgages available, each with its pros and cons. Understanding the differences can help you choose the best option for your situation. Here are the main types:

Fixed-Rate Mortgage

A fixed-rate mortgage has a set interest rate for the entire term of the loan, which means your monthly payments will remain the same. This can provide stability and predictability in your budget.

Adjustable-Rate Mortgage (ARM)

An adjustable-rate mortgage has an interest rate that can change periodically based on the market. These typically start with a lower rate than fixed-rate mortgages, but they come with the risk of higher payments in the future.

VA and FHA Loans

These government-backed loans can be great options for first-time buyers or those with less-than-perfect credit. VA loans are available to veterans and active military members, while FHA loans are available to any qualifying borrower.

To determine which mortgage is best for you, use Hughes Federal Credit Union’s helpful tools:

Step 4: Find a Real Estate Agent

A good real estate agent can be an invaluable asset. They can help you find homes that meet your criteria, negotiate the best price, and navigate the complexities of the buying process. Ask for recommendations from friends and family, and interview multiple agents to find someone you trust and feel comfortable with.

Step 5: Start House Hunting

Now comes the fun part—house hunting! Keep these tips in mind:

  • Make a Wish List: Prioritize what you need in a home versus what you want. Think about location, size, layout, and any other features that are important to you.
  • Attend Open Houses: Visit as many homes as possible to get a feel for what's available in your price range.
  • Be Ready to Act Quickly: The real estate market can be competitive, so be prepared to make an offer when you find the right home.

Step 6: Make an Offer and Close the Deal

Once you find a home you love, it's time to make an offer. Your real estate agent will help you determine a fair price and negotiate with the seller. After your offer is accepted, you'll enter the closing process, which includes:

  • Home Inspection: Hire a professional to inspect the property for any issues that might need to be addressed.
  • Appraisal: Your lender will require an appraisal to ensure the home's value matches the loan amount.
  • Final Walkthrough: Do a final walkthrough of the property to ensure everything is in order.
Finally, you’ll sign the closing documents and get the keys to your new home!

With the right preparation, you can turn your homebuying dream into a reality without the stress. Hughes Federal Credit Union is here to make the process smoother with personalized home loan options. Ready to take the next step? Check out the awesome home loan options at Hughes Federal Credit Union's Mortgage Loans page. Happy house hunting!