Tag Archives: Buying a Home

How Much House Can I Actually Afford?

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If you’re finally ready to buy a house after years of saving for a down payment, congratulations – this is an accomplishment worth celebrating. Now that you’re officially on the hunt for your dream home, you might be wondering exactly how much you should spend. You don’t ever want to be “house poor,” a situation in which you spend such a large portion of your income on homeownership – that you are not be able to afford much else. So what’s the best guidance on what is potentially the biggest purchase of your lifetime? Here’s the truth: Just because a lender approves you for a loan, doesn’t mean that figure is right for your budget.

Your Lender Doesn’t Know it All

Lenders work with the financial information you provide on paper, as well as your credit history. They won’t know how tight your budget might already feel. In other words, you are the only one who can make sure you’re not overextending yourself.

Additionally, buying a home is different from most other purchases because it requires you to look far into the future. You’re not just thinking about what you can afford right now, you’re planning for the next 5-10 years and even beyond that. Will your income change? Will you start a family or your own business? Many loan decisions are often made with the assumption that everything in your financial life will go perfectly. Unfortunately, that’s not how real life works. It’s important to leave yourself some financial breathing room, and plan for the unexpected.

Don’t Count on Future Salary Increases to Make it Work

Even if you’re not earning a large income yet, lenders could still approve you for a bigger mortgage than you might be ready for. Counting on future raises can leave you stretched too thin today. The smarter move is to buy a home that fits your current budget. Your home should not only be a comfortable place to live, but it should also be a place you can comfortably afford.

Be Cautious with Loan Terms

When you first start shopping for a home loan, you may come across different types of mortgages – and it’s important to understand exactly what you’re signing up for. For most buyers, the safest bet is a 30-year fixed-rate mortgage. With this type of loan, your interest rate stays the same for the entire life of the loan. That means your monthly principal and interest payments will remain consistent for three decades, making it easier to plan and budget for the long haul.

Think Beyond Your Monthly Payment

When you think about how much you’ll owe every month as a homeowner, it’s easy to focus just on your monthly mortgage payment – but homeownership actually includes much more. You’ll need to pay property taxes, homeowner’s insurance, utility bills, maintenance, and potential repairs – and that’s not the end of it. We recently published a blog discussing some common expenses associated with homeownership, so that you can more accurately budget for the “true cost” of your home.

How Do You Figure Out What You Can Afford?

Know Your Why: Start with your personal goals. Are you looking to stop renting, start building equity and put down your roots? Do you want to settle down in a specific neighborhood or school district? Your “why” will shape your decision just as much as your finances.

Set a Real Budget: One of the best tools to help you get started, is a home affordability calculator which includes taxes and insurance. There are some great examples of mortgage comparison and budget calculators available on our website.

Beyond online tools, take a closer look at your real-life spending. How much of your income goes to necessities? What if anything, are you saving? Do you have other debt? Many of us don’t have a real picture of how much we’re spending every month on non-essentials, and being aware of that is one of the best ways to save for what really matters.

Additionally, mortgage interest rates impact how much house you can afford. Right now, rates are hovering around 6.8% nationally, which may feel steep compared to the lower rates we saw just a few years ago.  Historically, 6% is an average mortgage rate. The key is to determine what monthly payment feels most comfortable for you.

Research: Your personal finances are only one part of the equation. Local real estate markets vary widely, so it’s important to thoroughly look into the details of the area where you’re looking to make your home purchase. Research real estate trends, property taxes, and the availability of homes within your price range.

Also consider expanding your search area. Some “hidden gem” neighborhoods might offer better value than the ones the majority are targeting. Working with a trusted real estate agent and/or a financial planner can help you make smart choices and stay grounded.

First Financial is here to help you navigate the homebuying process and buy the right house for you, so you can turn your house into a home without financial strain. If the area you’d like to call home is within Monmouth or Ocean Counties in New Jersey, you can begin our mortgage application process online – or get a pre-approval if you’re just starting to shop.* You can also visit a local branch, call 732.312.1500 – Option 4, or complete our quick inquiry form and a mortgage expert will set-up a phone call to answer your homebuying questions (no commitment required). Happy house hunting!

Article Source:

https://www.crossstate.org/about/communications/blog/how-much-house-can-i-afford/

*APR = Annual Percentage Rate. Subject to credit approval. Credit worthiness determines your APR. Rates quoted assume excellent borrower credit history and are for qualified borrowers. Your actual APR may vary based on your state of residence, approved loan amount, applicable discounts and your credit history. Higher rates may apply depending on terms of loan and credit worthiness. Minimum mortgage loan amount is $100,000. Available on primary residence only. The Interest Rates, Annual Percentage Rate (APR), and fees are based on current market rates, are for informational purposes only. Rates and APRs listed are based on a mortgage loan amount of $250,000. Mortgage insurance may be required depending on loan guidelines. This is not a credit decision or a commitment to lend. If mortgage insurance is required, the mortgage insurance premium could increase the APR and the monthly mortgage payment. See Credit Union for details. A First Financial membership is required to obtain a Mortgage and is open to anyone who lives, works, worships, volunteers, or attends school in Monmouth or Ocean Counties.

Essential Tips for Navigating the Spring Housing Market

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Why Prepare to Buy in Spring?

The spring housing market, peaking from April to June – is renowned for its heightened activity. The allure of spring lies not just in its weather, but also in the potential for finding great deals on homes that didn’t sell or were not listed in winter. The spring market – fueled by both new listings and the eagerness of buyers who are shaking off the winter chill, creates a landscape filled with opportunity. First Financial is here with 5 essential tips for a successful springtime homebuying journey.

1. Gauge Market Conditions: The spring market’s vibrancy varies, influenced by whether it leans in favor of buyers or sellers, prevailing mortgage rates, and local real estate trends. Keeping a pulse on these conditions can significantly impact your buying strategy. Evaluate each condition closely before making any commitments.

2. Isolate Your ‘Must-Haves’ From Your ‘Wants’: In the bustling spring market, knowing what you’re looking for is crucial. This includes the type of home, desired neighborhood, and essential amenities. However, with heightened demand and high competition, it’s important to isolate what you truly need from the things you want. A well-defined list of must-haves will streamline your search and help you act decisively.

3. Mortgage Preapproval is Key: Securing mortgage preapproval before diving into the housing market not only sets realistic expectations – but also positions you as a serious buyer, enhancing your bargaining power. Preapproval will allow you to know how much home you can realistically afford, as well as lock you in at the best interest rate.

Here at First Financial, we’re here to help you throughout the mortgage process. Stressed about where to start? Schedule a video chat or phone call with one of our mortgage experts with no commitment required! Ready to get preapproved? Simply fill out our quick mortgage inquiry form and a member of our Loan Department will contact you. You can also choose to sign up for our mortgage rate text alerts, and we’ll send you a text whenever our mortgage rates change.+

Finally, when you close on a home with a First Financial mortgage – you’ll receive a $500 Home Depot gift card, your appraisal is on us ($580 value), along with a host of other benefits.* Not ready to apply just yet? Utilize our wide range of website mortgage calculators to help you plan for the future!

4. Leverage Expertise: Collaborating with a real estate agent who understands the nuances of the spring market can be invaluable. They can provide insights into fair pricing, negotiate on your behalf, and even unearth hidden gems in your desired locations. Having a real estate agent on your side will position you ahead of buyers heading the journey alone and take many stressors off your shoulders.

5. Have Your Documents Ready: If you’ve made an offer and are hoping to fast-track the process, make sure you have your paperwork ready to go. The process of compiling all the necessary documents can be longwinded, so be sure to get a jump on things and have all your ducks in a row. Some of the documents you’ll need include:

  • Identification
  • W2s
  • Pay stubs
  • Bank statements

Before making an offer, build a mortgage document checklist to keep track of what you’ll need to close the deal. Our homebuying guide is a great resource!

Embrace the Spring Market with Confidence

The spring housing market offers a unique blend of challenges and opportunities. With strategic preparation, you can navigate this bustling season effectively. Whether you’re gauging market conditions, calculating what you can afford, or securing mortgage preapproval – we’re here to help you achieve your homebuying goals.

Contact us today and embark on your journey to homeownership with confidence. Don’t miss out on more financial tips and advice, be sure to subscribe to our First Scoop blog.

*APR = Annual Percentage Rate. Subject to credit approval. Credit worthiness determines your APR. Rates quoted assume excellent borrower credit history and are for qualified borrowers. Your actual APR may vary based on your state of residence, approved loan amount, applicable discounts and your credit history. Higher rates may apply depending on terms of loan and credit worthiness. Minimum loan amount is $100,000. Available on primary residence only. The Interest Rates, Annual Percentage Rate (APR), and fees are based on current market rates, are for informational purposes only. Mortgage insurance may be required depending on loan guidelines. This is not a credit decision or a commitment to lend. If mortgage insurance is required, the mortgage insurance premium could increase the APR and the monthly mortgage payment. See Credit Union for details. A First Financial membership is required to obtain a Mortgage and is open to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties. Qualified borrowers must meet eligibility requirements including, but not limited to, property location, loan amount, loan type, occupancy, property type, loan to value, debt to income ratios, FICO credit scores, refinance with cash out and other variables. NMLS CU ID: 685814. $500 Home Depot Gift Card will be issued at loan closing on any First Financial mortgage, while supplies last. Applicant to pay $580 appraisal fee up front at the time of appraisal. First Financial will credit the $580 appraisal fee back to the member at loan closing.

 +The Text Message Signup box must be checked in order to receive text messages. Standard text messaging and data rates may apply.

Looking to Buy Your First Home? Here’s Where to Start

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Buying a home is one of the biggest decisions you’ll ever make. However, don’t let that scare you. While purchasing a home is a big deal that will ultimately help shape your future, it’s also an excellent investment. The value of most homes increases over time and may come along with helpful tax benefits too. As a potential new homeowner, there’s a lot to learn about the home buying process and we’re here to help! Here are some useful tips for first-time home buyers.

Figure out what you can afford

Before you start house hunting, you’ll need to know what your budget is. Our loan officers can help you determine a price range through a pre-qualification process, which involves using financial information to get an estimate of the maximum mortgage you should be able to obtain. As a rule of thumb, we recommend your monthly house payment be about 30% of your total monthly gross income. Our mortgage calculator can also help you determine your monthly payments as you plan out your budget.

Make a wish list for your dream home

Now, this is the fun part! Before creating a home wish list, ask yourself, “Where do I see myself in the next 5 to 10 years or longer?” Having a vision for you and your family will help put the details of your dream home into perspective. With this in mind, you’ll need to figure out the must-haves of your ideal home, including backyard requirements, size of the home, and neighborhood. All of these factors will have an impact on the overall cost of your home and whether or not it fits your budget.

Find the right mortgage

Many lenders offer a variety of home financing options to choose from. The type of mortgage you end up using will affect what you’ll need to qualify for the loan, and how you’ll pay it back. That’s why it’s important to understand your options before making a decision.

Here are the main types of mortgages that are out there:

  • Conventional: This mortgage is a typical home loan contract between the lender and the borrower, at the lender’s risk. The borrower’s property is security, which means the lender can take your home for non-payment of the mortgage. Conventional mortgages are the most common type of mortgage loan (averaging about three quarters of U.S. mortgages).
  • FHA (Federal Housing Administration): The FHA will insure the loan for the lender against loss, in case the buyer cannot make payments. This mortgage requires the buyer to carry mortgage insurance through the FHA.
  • VA (Veterans Administration): These home loans are backed by the federal government and offered by private lenders to qualified members of the armed forces, active military personnel, veterans, or their widows.
  • Adjustable Rate Mortgage (ARM): The interest on an ARM may vary up or down based on the market. ARMs often offer a lower beginning interest rate. However, this rate will go up over time.
  • Fixed Rate Mortgage: The interest rate on this agreement stays the same for as long as you hold your mortgage, no matter how interest rates change in the financial markets.

When it comes to understanding your financing options, we recommend consulting with one of our mortgage experts to learn more about the mortgage process.

Work with a realtor

The home buying process is already stressful enough, so why not take some of the work off your plate? A realtor can help you save time by pre-selecting homes within your price range and requirements. Not to mention – they’ll be fully immersed in market trends, tax information, and area considerations like school districts. As you get closer to purchasing a home, they will be your go-to for handling negotiations and arranging for a home inspection and appraisal. Once you’re ready to make an offer on a home, they can help with that too.

There are many important steps to the home buying process, even after your offer has been approved. Rest assured knowing a First Financial mortgage expert is here to help you along the way, should you be looking to purchase a home in Monmouth or Ocean Counties, NJ.*

Are you ready to get started? Apply for a mortgage loan today, call our Loan Department at 732.312.1500 Option 4, or visit a First Financial branch. Also be sure to check out our home buyer’s guide to help you through the research and application process.

Happy home buying!

*APR = Annual Percentage Rate. Subject to credit approval. Credit worthiness determines your APR. Rates quoted assume excellent borrower credit history and are for qualified borrowers. Your actual APR may vary based on your state of residence, approved loan amount, applicable discounts and your credit history. Higher rates may apply depending on terms of loan and credit worthiness. Available on primary residence only. The Interest Rates, Annual Percentage Rate (APR), and fees are based on current market rates, are for informational purposes only. Mortgage insurance may be required depending on loan guidelines. This is not a credit decision or a commitment to lend. If mortgage insurance is required, the mortgage insurance premium could increase the APR and the monthly mortgage payment. See Credit Union for details. A First Financial membership is required to obtain a Mortgage and is open to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties.

Renting vs. Owning – What’s the Right Move?

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There are many reasons why people may choose to rent rather than own a home. Some renters simply like the idea of living in a temporary place as they are still unsure if they want to settle down there permanently, while others want to avoid the many expenses of home ownership.

However, the major downside to renting is that you’re giving money to your landlord every month – money that you’ll unfortunately never get back and it won’t help you build equity.

In contrast, paying for a mortgage each month may be costly, but will slowly reduce your home loan balance over time. You’ll also get to own the house, which is an incredibly valuable asset nowadays.

If you’re deciding if you should continue renting or if now would be the best time to start owning a home, then you’ve come to the right place. With the way rent continues to increase each year, you might find the latter option is better for you.

Rent Prices Continue to Increase

According to a report by Realtor.com, the official website of the National Association of Realtors – the median rent amount in the 50 biggest metro areas was $1,575 per month. The data suggests that rent amounts rose by 8.1% from the previous year, translating to an extra $118 to pay each month.

Realtor.com also revealed that rent amounts for all unit sizes are currently at an all-time high. Renting a studio apartment increased by 4%, while 1-bedroom and 2-bedroom apartments saw an 8% and 10.2% rise in rent, respectively.

Is Renting Still a Good Idea?

If you aren’t yet sure if you want to settle down, then continuing to rent might be a good idea until you can map out your future a bit more. Many people are still not sure whether they want to move out or stay due to the ongoing COVID-19 pandemic, so if you’re not yet ready to make such a permanent move – that’s quite understandable.

However, for those who are interested in acquiring a place they can own – waiting for the lease to expire and looking for a house to buy could be the ideal move. This way, you can start investing your money toward a valuable asset that will have your name in the title.

To help you decide if now would be a good time to buy a home, you should consider the following questions:

  • Do I have the money to make a down payment?
  • Is my credit score acceptable enough to apply for a mortgage loan?
  • Do I have any debt and, if so – how much more can I afford?

It’s important to ask yourself these questions before purchasing a property.

Conclusion

The cost of renting a place to live continues to increase every year, which makes it more and more impractical to continue doing so. If you believe that now is the right time to own a home, then you might consider applying for a mortgage. When you buy a home, you’ll often be able to save money in the long run that would have otherwise been used on rent (which doesn’t provide you with any equity or a long-term investment).

At First Financial, we can help you get pre-approved for a mortgage so you can know right away if owning a home is the right move for you.*

Contact us today with any questions or visit our website to learn more.

*APR = Annual Percentage Rate. Subject to credit approval. Credit worthiness determines your APR. Rates quoted assume excellent borrower credit history and are for qualified borrowers. Your actual APR may vary based on your state of residence, approved loan amount, applicable discounts and your credit history. Higher rates may apply depending on terms of loan and credit worthiness. Available on primary residence only. The Interest Rates, Annual Percentage Rate (APR), and fees are based on current market rates, are for informational purposes only. Mortgage insurance may be required depending on loan guidelines. This is not a credit decision or a commitment to lend. If mortgage insurance is required, the mortgage insurance premium could increase the APR and the monthly mortgage payment. See Credit Union for details. A First Financial membership is required to obtain a Mortgage and is open to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties. 

Tips for Buying a Home in the Current Housing Market

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If you are currently in the market for a home, you are probably well aware that the nationwide housing inventory is at a record low, and the shortage is causing a problem for many prospective buyers. The current market can even create problems for sellers, because sellers still need to live somewhere after they sell their home. Between bidding wars, cash purchases, and low available inventory – here are a few strategies to help you navigate the current housing market.

Know where you stand. Being aware of your credit score, borrowing power, and housing budget is the key to security in today’s market. Sit down with your lender, financial planner, or real estate agent to talk about realistically, what can you afford. It’s especially important to know exactly how high you can go in a bidding war, because homes are often selling above value and at record speed.

Get expert advice. A real estate agent familiar with the current housing market conditions can advise you when homes you’re looking at are priced too high, and provide tips and leads you normally wouldn’t be able to get on your own. Agents who are familiar with your target neighborhood may know of possible pocket listings too – homeowners who may want to sell without putting their house on the market. In these instances, you may be able to get a home before the competition ever finds out.

Be first in line. The competition is definitely heating up these days. If you want a home badly enough, you’ll have to be ready to put in an offer as soon as the home is listed. Even if the seller decides to let the public bid on their home, if you’re prepared – you’ll get a chance to tour the home as soon as it’s listed if your buyer’s agent is active in the local area, and be one of the first bids in.

Get pre-qualified by your lender before you shop. Having pre-qualification paperwork to present when you place your offer is impressive to a seller and will get you a step ahead of the process in normal market conditions. In today’s market, having proof that you can afford the home you are bidding on is the bare minimum. Right now being pre-approved for a certain amount is very important in terms of competing offers. You’ll also want to be sure you can provide proof of where the down payment is coming from too.

Show that you want it, but don’t get too caught up in a bidding war. It’s tempting to keep placing higher counter offers if you’re outbid on a house that you love, but don’t let your emotions get the best of you. Stick to your budget and it’s okay to bow out if bids increase drastically above value. You can also send a letter to the owner as well. This tactic frequently works. Sellers are often emotionally attached to their homes and memories they’ve made in it, so it may help your offer get selected by letting them know just how much the home would mean to you and your family.

In the end, you may just have to be patient and try not to get discouraged. You don’t want to get stuck with a mortgage you can’t afford either, and eventually – the housing market will normalize again. When that does happen, you’ll be happy you held out for a home you could comfortably afford.

When you’re ready to take that leap – come talk to First Financial. Take advantage of our great mortgage and refinance rates, easy application process, and we’ll help you get pre-qualified before you shop.* Give our lenders a call, they’ll be happy to answer your questions with no commitment required!

*Subject to credit approval. Credit worthiness determines your APR. Rates quoted assume excellent borrower credit history and are for qualified borrowers. Your actual APR may vary based on your state of residence, approved loan amount, applicable discounts and your credit history. Higher rates may apply depending on terms of loan and credit worthiness. Available on primary residence only. The Interest Rates, Annual Percentage Rate (APR), and fees are based on current market rates, are for informational purposes only. Mortgage insurance may be required depending on loan guidelines. This is not a credit decision or a commitment to lend. If mortgage insurance is required, the mortgage insurance premium could increase the APR and the monthly mortgage payment. See Credit Union for details. A First Financial membership is required to obtain a mortgage and is open to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties.

Article Source: Moneyning.com

Tips for First Time Home Buyers

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Even if you’re not a first time home buyer, looking for and financing a home can be stressful. When you don’t know where to begin or what to do, it can be even more stressful – especially because it probably will be the biggest purchase of your life. Check out these tips for first time homebuyers to get the most out of your home buying experience and keep it as painless as possible.

Determine how much house you can afford and get preapproved.

When you’re ready to look for your first home, it’s important to know how much home you can afford. This will narrow down your home search and will give you a realistic view of the types of homes you can buy inside of your price range. You will also avoid the temptation to purchase a home where you’ll struggle to make the payments.

Save up for a down payment. 

With such a big purchase, having a down payment to invest in your home is important. A good rule of thumb for a down payment is to save 20% of your mortgage. For instance, if you have a $100,000 mortgage, your target down payment is $20,000.

If 20% of your mortgage doesn’t seem feasible, there are other options out there for first time homebuyers that will allow you to save and invest a smaller amount into your mortgage. If you’re wondering how much you need to save to achieve your desired payment, check out one of our mortgage calculators for reference.

Pay off as much debt as possible.

One of the factors that will determine your creditworthiness is your debt-to-income ratio. A debt-to-income ratio measures the total amount of debt you’re paying off each month compared to the amount of income you’re bringing in within the same period. If the amount of debt you’re paying off is considerably more than your income, this will negatively impact your credit score. In turn, this will hurt your chances of being preapproved for and financing a mortgage.

Try to avoid inquiries on your credit report.

When you’re looking to finance your first home, one item that first time homebuyers seem to overlook is avoiding new lines of credit. For instance, getting a new cell phone, adding on television service, or even setting up a utility account will all affect your credit score and your credit inquiries.

Before you buy a house, your focus should be on maintaining and improving your credit score while saving as much as possible for a down payment and avoid building new avenues of credit.

Buying your first home is no easy feat. When you finance your home with First Financial, we’re with you every step of the way and you’ll be well on your way to opening the door to your new home! Contact us today to learn more about the mortgage process, and check out our educational guidebook to happy homeownership.

APR = Annual Percentage Rate. Subject to credit approval. Credit worthiness determines your APR. Rates quoted assume excellent borrower credit history and are for qualified borrowers. Your actual APR may vary based on your state of residence, approved loan amount, applicable discounts and your credit history. Higher rates may apply depending on terms of loan and credit worthiness. Available on primary residence only. The Interest Rates, Annual Percentage Rate (APR), and fees are based on current market rates, are for informational purposes only, are subject to change without notice and may be adjusted based on several factors including, but not limited to, property location, loan amount, loan type, occupancy, property type, loan to value, debt to income ratios, FICO credit scores, refinance with cash out and other variables. Mortgage insurance may be required depending on loan guidelines. This is not a credit decision or a commitment to lend. If mortgage insurance is required, the mortgage insurance premium could increase the APR and the monthly mortgage payment. See Credit Union for details. A First Financial membership is required to obtain a mortgage and is open to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties. NMLS CU ID: 685814