Buying your first home is quite an exciting time. It’s a huge milestone in one's life, and for those who are younger, it can even be considered one of their first big purchases as an adult. However, as exhilarating as it can be, it can also be just as anxiety inducing, especially if you’re not sure where to start.
To help calm those nerves, we sat down with Kristine Clark, mortgage loan specialist at Purdue Federal Credit Union, to help guide first-time home buyers in the process from start to finish. Clark was able to highlight many important factors to consider along the way when purchasing a home for the first time, such as budgeting, mortgages and location, so be sure to read on to find out more.
GreatNews: For a first-time home buyer, the process can sometimes seem overwhelming if they're not sure where to start. What would you recommend the very first step should be for someone looking to purchase their first home?
Clark: Take account of your current financial situation; know where your money is going on a monthly basis. Talk to a professional, maybe even a few, and find out if buying a home makes sense for you.
G: How do you know you're financially ready to purchase your first home?
C: Affordability is one factor, but many factors go into it; there isn’t one magic formula. In my career I have helped over a thousand people finance their homes and they are so unique in their reasons for being in their home and how they got there. Diversity is one of my favorite aspects of mortgage lending.
G: What would the ideal budget look like for someone purchasing their first home?
C: As a general guideline your mortgage payment (including property taxes and insurance) should be between 28-36% of your monthly pre-tax income. Together your house payment and other monthly minimum payments should be less than 43% of your monthly pre-tax income. You’ll need to spend less if you have other financial goals or want to spend more on travel, etc.
G: How much should be saved for all costs included in buying a home?
C: You will want to save for a down payment, which can be anywhere from 0% to 20% or more depending on the loan type. In addition, closing costs can be 3% to 7% of the purchase price.
G: How can home buyers apply for a mortgage with Purdue Federal Credit Union?
C: Apply any time at PURDUEFED.COM/KRISTINE or contact me at 219-281-3288 for an appointment.
G: How does Purdue Federal Credit Union help first-time home buyers throughout the process?
C: We have a first-time home buyer loan that offers a no down payment option.
G: What are some tips to make sure your credit score is in the best shape to purchase a home?
C: Keep usage on your revolving accounts under 30% of your available credit and make all payments on time. Limit the amount of times you allow someone to pull your credit, and review and monitor your credit report for inaccuracies.
G: What are some common mistakes you've seen other first-time home buyers make, and how can others avoid these issues?
C: A mistake I advise against is comparing yourself to others and assuming your only option is a first-time home buyer product. Your situation may indicate other opportunities that suit you better.
G: What are some tips that maybe aren't that well known that you would want a first-time home buyer to know?
C: It will cost you nothing to have a conversation with a mortgage specialist. Have that conversation early so that you have adequate time to prepare for a home purchase no matter how near or far into the future that may be.
G: What areas in Northwest Indiana are ideal for first-time home buyers, financially and/or otherwise?
C: Northwest Indiana is unique in that aspect, every town and city seems to have an array of amenities and price points where a real estate agent will make a huge impact. You can find a real estate agent at www.GNIAR.com [gniar.com].
G: Where should first-time home buyers be looking for a house in Northwest Indiana?
C: Being near your place of business is easy nearly anywhere in Northwest Indiana with access to highways and transportation such as the South Shore Line. Parks and schools are abundant, making it a tall order to narrow down. For my family we call Hebron home.
G: Is there anything else you would like to add that first-time home buyers should know or be aware of?
C: Do not shy away from asking questions. At Purdue Federal Credit Union, we are here for you.
To learn more about how Purdue Federal Credit Union can help you with your finances when it comes to buying a home and beyond, visit their website at PURDUEFED.COM.