Tag Archives: First Time Home Buying

Strategies to Afford Your First Home Down Payment

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Buying a home is a pivotal milestone and a cornerstone of the American dream. Yet for many, the daunting hurdle of a down payment can seem insurmountable. The good news is that with careful planning and strategic saving, homeownership can become a reality sooner than you think. At First Financial, we’re here to guide you through the journey of saving for your first home’s down payment.

1. Open a Dedicated Savings Account and Automate it

One of the key steps to successfully save for your down payment is to open a dedicated savings account. By keeping your down payment fund separate from your regular savings, you will gain clarity on your progress. Consider opening a high-yield savings account to maximize interest rates and let your money work harder for you.

To make saving seamless, automate your contributions. Set up direct deposit or automatic transfers from your checking account to your dedicated savings account. Consistency is key – even modest contributions can accumulate over time and help you reach your goal faster.

2. Really Look at Your Income

Scrutinize your budget with a discerning eye. Trim discretionary spending wherever possible. Can you live without certain luxuries temporarily? The power of ruthless budgeting lies in redirecting these funds toward your down payment savings. For dual-income households, explore the possibility of living off of one income temporarily and saving the other. Remember, it’s not about deprivation – but about redirecting resources toward a meaningful goal. Your disciplined efforts will pay off when you step into your very own home.

3. Put Every Spare Dime Toward it

Windfalls, bonuses, tax refunds – seize every financial opportunity. Allocate these unexpected inflows directly to your down payment fund. Adopt a ‘spare change’ mindset by enrolling in bank programs that round up debit transactions to the nearest dollar, with the difference automatically transferred to your savings. A popular strategy is to apply the “spare change” concept to your regular finances. Whenever you receive a chosen amount in change, funnel it into your down payment fund. These seemingly small contributions can add up over time.

4. Look at Assets, but be Smart

While liquidating non-cash assets can provide a boost to your down payment fund, be cautious. Stocks, bonds, and CDs can be converted – but tapping into retirement accounts might compromise your long-term financial security. It’s essential to strike a balance between immediate needs and future financial well-being.

5. Set Specific Goals

Before embarking on your savings journey, establish clear goals. Determine the total amount you need for the down payment, closing costs, and other post-purchase expenses. A down payment calculator can help you gauge the target amount.

6. Scour Your Spending

Take a closer look at your expenses and identify areas for savings. It’s not about giving up life’s small pleasures, but about minimizing unnecessary spending. Compare insurance rates, bundle services, and eliminate unused subscriptions to free up extra cash. Tracking your spending for a month can reveal areas where you can cut back.

7. Automate to Maximize Savings

Automate your savings by setting up recurring transfers to a high-yield savings account. Keep short-term savings in secure options like money market accounts or certificates of deposit. Align the maturity of CDs with your anticipated home purchase timeframe to optimize returns.

8. Earn Extra Income

Explore side gigs or freelance opportunities to supplement your income. Be cautious of potential scams and do thorough research before committing to any income-generating opportunity. Additional income streams can significantly boost your savings efforts.

9. Keep Your Eye on the Prize

Regularly review your savings progress, celebrating each milestone achieved. Utilize tools like NerdWallet’s app to monitor your journey. Visual aids such as a savings chart on your refrigerator or images of your dream home, can provide motivation during challenging moments.

At First Financial, we understand the significance of homeownership. Saving for a down payment may require careful planning, sacrifice, and time – but the rewards are plentiful. By implementing these strategies and seeking our expert guidance, you can confidently work toward your first home purchase, turning your dreams into a tangible reality.

If you’re a first-time homebuyer in Monmouth or Ocean Counties, ask us about our Home Possible Advantage Mortgage Program.* Stop into your local branch or contact us to get started today!

*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.

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

 

Can Buying Your First Home Actually Hurt Your Credit?

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For generations, owning a home has been considered an integral part of the American Dream. Life without a home of your own, two kids, golden retriever, and a white picket fence just didn’t make sense. Okay, that last part may be a bit of an overstatement, but the fact remains – family members and financial experts have long recommended home ownership as a sensible path to financial stability.

When done correctly, buying a house can be one of the smartest investments you’ll ever make. It will undoubtedly be one of the biggest. As a first-time home buyer, your finances will face the scrutiny of mortgage underwriters, so it’s essential to have all your economic ducks in a row before you even begin applying for a mortgage. And while a smooth financing process is reason enough to be smart with your money, financial stability can also help when your credit takes a hit for five or six months following your big purchase. Wait. What?! Yep. That’s right. Your credit score can, and probably will – drop a bit for a few months after you become a homeowner.

Great for you. Not so great for your credit. Why does buying a house – which, by all accounts, is a wise financial decision – have a negative impact on your credit? The answer isn’t as crazy as you might think. When you apply for real estate financing, mortgage companies pull your credit report to determine whether it makes sense for them to lend you money. In credit industry terms, this is known as a “hard inquiry.” Since these inquiries signal you could be incurring additional debt, they often result in a small, temporary dip in your credit score.

Fortunately, it’s relatively simple to limit the negative impact of hard inquiries. If you’re going to apply for financing with multiple mortgage lenders, do your best to conduct all of your searches within a 30-day window. Because they understand that many people shop for the best rate even though they’ll only secure a single loan, major credit bureaus structure their rating systems to account for multiple inquiries within the same one-month reporting period. While there may still be a dip in your score, grouping your credit pulls will help you minimize the damage. And don’t worry, once you start making payments on time and establishing a positive mortgage history, your credit score should bounce back to where it was before.

Experience a little short-term pain for a long-term gain. From the opportunity to build equity to the satisfying sense of home ownership, there are a variety of excellent reasons to leave the renting life behind. A temporary dip in your credit score shouldn’t scare you away. If you entered the homebuying process with your finances in order and you resist the temptation to rack up additional debt as you furnish your new home, your credit rating should be just fine in the long run. And let’s be honest, you’ll probably be so busy remembering the new route to work and rearranging your living room furniture, that six months will pass before you’ve had a chance to think about your credit score anyway.

If you’re just beginning your home search and in the Monmouth or Ocean County area, your local First Financial Federal Credit Union branch is a fantastic place to start. In addition to reviewing your current financial situation, our representatives can also help you determine how much house you can afford and which mortgage program is right for you. We may even be able to help you get prequalified, which can give you the extra leverage you need when you do find that perfect house. If you have questions about the mortgage process or don’t know how to get started, we are here for you. Contact the Loan Department at 732-312-1500, Option 4 or learn more about First Financial mortgages on our website.

*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, or attends school in Monmouth or Ocean Counties.

 

4 Tips for Buying Your First Home

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The search for your first home can be stressful. Finding the right one is no cakewalk. You look at dozens of houses and neighborhoods, trying to find the perfect fit. And that’s only half the battle. If you’re looking to buy your first home, here are some tips to help you through the process.

Have a good grasp on your credit: Your credit score is of the utmost importance when trying to buy your first home. It can drastically effect your interest rate and even prevent you from getting the loan altogether. Make sure you credit is in good shape before you start the journey to purchasing your first home.

Figure out how much home you can afford: Imagining yourself in the empty mansion across town is fun, but be realistic. Look at your budget, find out how much extra money you have at the end of each month (add your current rent & utilities to this total), and you’ll have a good idea of what kind of mortgage payment you can handle. If you’re going from an apartment to your new house, remember to factor in the difference in utilities, taxes, insurance and any unexpected expenses that could pop up along the way.

Sort out the needs and wants: It’s good to make a list of the things you NEED to have in your new house, and the things you WANT to have in your new house. When buying your first home, it’s important to remember that you may not necessarily be buying your dream home. You can definitely find a home that meets a lot of the criteria on your checklist, but know you may have to give up a few of your wants in order to find a home that fits your budget.

Find the right realtor: Your realtor’s job is to help you out on this nerve-wracking journey and make the process as easy for you as they can. Pick a realtor who makes you feel comfortable and knows what they’re doing. If they don’t seem to care about meeting your needs, find someone who will.

First Financial offers a number of great mortgage options, including refinancing – click here to learn about our 10-, 15-, 20-, and 30-year mortgage features and see what a good fit for your home is!*

*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, or attends school in Monmouth or Ocean Counties.

Article Source: John Pettit for CUInsight.com

5 Foolish Mistakes First-Time Home Buyers Make

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Buying a home is exciting, especially when you’re buying for the first time. In the midst of all of the excitement, it’s easy to become blinded by beautiful back-splashes, granite and quartz counter tops, hardwood floors, and fenced-in backyards. While looking at homes that are completely perfect from top to bottom, you may begin to rationalize a larger purchase than you had originally planned for — “This house is perfect for me; it’s worth $50,000 extra dollars for me to have a house with enough space in a perfect location,” or “We were planning on spending a little bit of money on painting; we can spend $50,000 extra on this house because it doesn’t need any work.” These are some common mistakes first-time homebuyers often make – so be careful to avoid them if you are about to buy your first home.

1. Overspending

Before you even look at a single property, you need to know exactly how much you can afford. We have several online financial calculators you can use, but these tools are only estimates. Use these tools as a guide, but then adjust the amount based on your individual situation. How much is your current rent payment? Did you meet that payment each month with ease, or was it a bit of a struggle each month? The payment you can afford right now is a good indicator of what you’ll be able to afford in your new home.

Meet with a lender and get pre-approved for an amount you can afford. Also, keep in mind that it’s always better to lean towards a lower amount, rather than a higher amount. You do not have to use the entire amount you’re pre-approved for. Once you know how much you have to work with, then and only then should you start your house hunt.

2. Counting chickens before they hatch.

When determining how much mortgage you can afford, base this amount on what you are earning today. That is, the income that you and your spouse earn from stable sources. If you’re in your last year of law school, for instance, don’t assume that you will be earning much more money in a year or two, so you can afford a larger payment. If your wife is expecting a big promotion, don’t base your mortgage payment off of her potential salary increase. No one can predict the future, and although you may very well be in a better financial situation a year down the road, there is no guarantee.

3. Failing to account for closing costs, property taxes, HOA, and homeowner’s insurance.

When you rent a home, you generally only have one payment — rent — and then maybe renter’s insurance, which is optional. When you buy a place, your mortgage payment is only the beginning of an array of costs. Homeowner’s association fees can be as low as $0 or as high as a few hundred dollars per month, depending on where you live and the amenities and services offered.

Homeowners insurance and property taxes very based on your geographic location. Florida has notoriously high homeowner’s insurance rates, where they average $161.08 per month. In Idaho and Wisconsin, rates are a bit lower, averaging below $50 per month, according to Value Penguin. Property taxes average higher in New Jersey, New Hampshire, Texas and Wisconsin and they’re lower in Louisiana, Hawaii, and Alabama.

Then on top of all of those costs, if your down payment is less than 20 percent of the selling price, you may end up paying an additional cost — private mortgage insurance (PMI) — which is basically insurance for the lender in case you default on your loan. At the end of it all, your $800 mortgage payment can easily turn into a $1,200 house payment.

4. Failing to protect yourself with home inspections, contingency clauses, etc.

During your house hunt, you may find a house that looks great at first glance. Then, as you walk through a few of the rooms, you notice problems with the house — maybe the floors squeak or the kitchen island is off-centered. After walking through the house, you come to realize that someone simply put lipstick on a pig, and this house is in questionable shape.

Home inspections provide you with some protection. The inspector will be able to find problems that you can’t and you want to know these problems before you sign on. “The seller isn’t likely to tell you there’s mold in the basement or the walls are poorly insulated,” reports MSN.

Contingency clauses also offer a form of protection. “A mortgage financing contingency clause protects you if, say, you lose your job and the loan falls through or the appraisal price comes in over the purchase price. Should one of these events occur, the buyer gets back the money used to secure the property. Without the clause, the buyer can lose that money and still be obligated to buy the house,” explains Justin Lopatin, a mortgage planner with American Street Mortgage Co.

5. Being too naive or too paranoid.

Some first-time home buyers are naive. Overly optimistic, they think nothing could possibly go wrong. If a home has a few problems, they view them as easy fixes and are unrealistic when it comes to the cost and time it takes to fix up the home. Some naive buyers will move to a neighborhood on the wrong side of town, forgetting that you can fix up a house, but you can’t change your neighborhood or location without moving.

Paranoid buyers can be difficult to work with. They may not believe the price is an accurate assessment of the house’s market value. They may submit low offers which can be consistently rejected. Paranoid buyers may not trust real-estate agents, and may even try to buy their home without an agent, which is generally an unwise choice.

Stop into any First Financial branch and we can help you with your home buying journey. We provide great low rates and offer a variety of Mortgage options – to speak with First Financial’s lending department, call us at 732.312.1500 Option 4.* 

First Financial also offers a Mortgage Rate Text Messaging Service so you can receive updates on our low Mortgage Rates straight to your mobile phone. You can subscribe to our Mortgage rate text message service by signing up for text alerts, and receive instant notification when our mortgage rates change.** We’re here to help you achieve your financial dreams!

*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, or attends school in Monmouth or Ocean Counties.

**You must check the Text Message Signup box when registering in order to receive rate change text messages.+ If you do not receive an automated confirmation message after enrolling, please text “Yes” to (201) 808-1038

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

Original article source by Erika Rawes of Wall St. Cheat Sheet.