Becoming a homeowner puts you in control of an investment that you can leverage for a lifetime. Perhaps even generations. But the process of becoming a homeowner for the first time can feel intimidating. Don’t sweat it – we've got your back. This checklist will help you get on the right track. And, when you’re ready to buy, PSECU’s First-Time Homebuyer program* has you covered.
Determine Your Budget
Create a budget to understand how much you can comfortably afford to pay on housing costs each month. The rule of thumb/best practice suggests that your monthly mortgage payment should account for no more than 25-28%% of your monthly gross pay.
You’ll also want to budget for closing costs, such as those listed below:
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Loan origination fee: A charge by the lender for evaluating and preparing a mortgage loan.
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Property taxes: Buyers pay around two months’ worth of property taxes at closing.
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Title insurance: A policy that protects you in the event of title problems or claims made on your home after closing.
Learn About Loan Types
You’ll also want to learn about the borrowing options available to you prior to applying for a mortgage. Pay close attention to mortgage rates and lengths, as these factors will determine how much and how long you’ll be paying.
Our First-Time Homebuyer mortgage program offers both fixed- and adjustable-rate mortgages, along with term options of 10, 15, 20, 25, or 30 years.
Fixed-rate mortgages lock in the interest rate, enabling the rate to stay the same for the length of your loan period.
At PSECU, we have a variety of adjustable-rate mortgage options that will lock in your rate for an initial period of time. After the initial period, the rate can increase or decrease in any one year by just 1%.
You may be required to complete a first-time homebuyer educational course to qualify for a first-time homebuyer mortgage. PSECU has this requirement. The courses are free and designed to make sure you’re prepared for everything that comes with taking on a mortgage.
Get Prequalified
Prequalification means you get preliminarily approved by a lender for a mortgage up to a certain loan amount. It’s a key step in buying a home and is typically good for anywhere from 60-120 days, depending on the lender. So, once you’re ready to start your home search in earnest, this is an important step whether you’re a first-time homebuyer or not.
You may need to provide the lender with personal financial information. This could include pay statements and/or other documentation.
It’s important to note that getting prequalified does not mean you have been fully approved for a mortgage with that lender. You will still need to go through the mortgage application and review process once you are under contract on the home you wish to purchase.
Research lenders beforehand to find one you trust. At PSECU, our mortgage originators work one-on-one with you to determine what your needs are and how we can best serve you from prequalification to closing.
Find a Real Estate Agent
Finding a real estate agent is an important step in your homebuying process. Partner with an agent who’s familiar with the area you’re looking to move to. Your agent can provide you with current listings, as well as help you understand current market trends. Also, rapport is important – so, make sure you’re comfortable with the agent and feel like you can trust them.
A few questions to ask when meeting with a potential agent:
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How long have they been selling real estate?
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How many homes did they help buyers purchase last year and were any in your desired neighborhood?
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What is the current state of the housing market in the area you’re looking to buy in?
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What percentage of sales price do they charge in commission?
Begin Your Home Search
Now, after all that work, comes the fun part — searching for homes! Compile a list of must-haves and nice-to-haves to help guide your search. For instance, maybe you've got your heart set on a spacious backyard, but you’d be willing to compromise on less acreage if a home has all your other must-have features, like a swimming pool or a finished basement.
And, definitely take the time to browse online. Before scheduling showings with your agent, you can use real estate listing sites to find available inventory.
Make an Offer
Once you’ve found the perfect place, you'll need to submit an offer through your agent. Determine what you’re willing to pay. Review all financial factors and arrive at a max price.
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Assess property taxes
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Calculate your monthly mortgage payments and any additional insurance costs
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Be aware of any expenses associated with maintenance and repairs
Speak with your agent. Let your agent know you want to make an offer and review the specifics.
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Price and negotiations strategy
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Seller assist
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What appliances or furnishing are included with the purchase of the home (if any)
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Closing date
Submit Your Mortgage Application
Submitting a mortgage application requires supplying the lender you’ve chosen with a significant amount of documentation. Communicate with your lender so that you understand what you’re responsible for.
Make sure you have access to the following:
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Sales contract
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W-2 forms from the past two years
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Pay statements from the last 30 days
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Proof of other sources of income
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Federal tax returns from the past two years
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Bank statements from the past two months
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Details on long-term debts, like car or student loans
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ID and Social Security number
PSECU’s First-Time Homebuyer mortgage features 100% financing* with no minimum down payment requirement, and we do not require private mortgage insurance (PMI), which can be required for first-time homebuyers with other first-time homebuyer mortgage products.
Schedule a Home Inspection and Appraisal
If the seller accepts your offer, you may want or need to schedule an inspection to make sure there are no issues with the home. If the inspection results in discovery of a major issue, you’ll likely want to negotiate a change in purchase price or request seller assistance – both options can be discussed beforehand with your agent.
Close on Your New Home
The last step is to finalize the sale at settlement, or closing, by signing paperwork. Be prepared to pay any closing costs or down payment (if you are putting any money down on the home). Typically, certified or cashier’s checks, or a legitimate wire transfer are the only acceptable forms of payment at closing. You’ll confer with your agent in advance to find out the specific amount due at closing.
Don’t be afraid to ask any questions at closing – review the paperwork thoroughly. And make sure you save a copy of all the documents related to the settlement in a safe place.
Now that you’ve got a comprehensive checklist for your first foray into the world of home ownership, you’ll need a mortgage to help get you the keys to your new home!
PSECU’s First-Time Homebuyer program was designed to help credit-worthy borrowers realize their goals of home ownership by eliminating the barriers of a large down payment and the additional monthly cost of PMI.
PSECU First-Time Homebuyer Mortgage Features:
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Finance up to 100% of the purchase price
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No minimum down payment required
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No private mortgage insurance (PMI) required
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Low PSECU-related closing costs
Additional Product Info:
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Fixed- and adjustable-rate options available
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Terms available for 10, 15, 20, 25, and 30 years
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Down payment assistance allowed
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Borrower(s) is required to have 1% of total loan amount in reserves
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Up to 3% seller assistance allowed
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Maximum loan amount of $726,200
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Borrower(s) must not have owned a home in the last 3 years
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At least one borrower must take and complete a homebuyer education course
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PSECU mortgage originators will provide links to qualified course options
We recognize the tremendous impact owning an asset like a home can have on your financial stability and future. The credit union philosophy of “people helping people” drives us to offer products that create opportunities and growth for our members, enabling you to own your future.
Ready to get started? Allow us to be the first ones to say, “welcome home.”
*Additional options for first-time homebuyer products/terms available. PMI may be required. Contact one of our mortgage originators to find out which one is right for you.