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Tips on saving for a house

If you find yourself daydreaming about a place to call your own, the first step is to set aside any money you can and take an evaluation of your financial health. Start with these tips on saving for your house:

1. Develop a budget and timeline. Start by determining how much you’ll need for a down payment. Create a budget and calculate how much you can realistically save each month — that will help you gauge when you’ll be ready to transition from renter to homeowner.
2. Establish a separate savings account. Set up a separate savings account exclusively for your down payment and make your monthly contributions automatic. By keeping this money separate, you’ll be less likely to tap into it when you’re tight on cash.
3. Shop around to reduce major monthly expenses. It’s a good idea to check rates for your car insurance, renter’s insurance, health insurance, cable, Internet or cell phone plan. There may be deals or promotions available that allow you to save hundreds of dollars by adjusting your contracts. 
4. Monitor your spending. With online banking, keeping an eye on your spending is easier than ever. Track where most of your discretionary income is going. Identify areas where you could cut back (e.g. nice meals out, vacations, etc.) and instead put that money into savings.
5. Celebrate savings milestones. Saving enough for a down payment can be daunting. To avoid getting discouraged, break it up into smaller goals and reward yourself when you reach each one. If you need to save $30,000 total, consider treating yourself to a nice meal every $5,000 saved. This will help you stay motivated throughout the process.

Financial obligations and debt

Consider all of your current and expected financial obligations like your car payment and insurance, credit card debt and student loans. Make sure you will be able to make all the payments in addition to the cost of a new home. Aim to keep total mortgage payments plus utilities to less than 25 to 30% of your gross monthly income. Recent regulatory changes limit debt to income (DTI) ratio on most loans to 43%.

Check your credit score

A high credit score indicates strong creditworthiness. Prospective homebuyers can expect to have their credit history examined. A low credit score may keep you from qualifying for a low interest rate on your mortgage loan. If you find that you do have a low credit score, you may want to delay moving into a new home and take steps to raise your score.

Factor in all new home costs

Create a hypothetical and somewhat realistic budget for your new home so you don’t find yourself financially stressed after moving into your new house. Find the average cost of utilities in your area and factor in the following that may apply:

• gas
• electricity
• water
• cable or internet
• trash pickup
• yard maintenance
• real estate taxes
• mortgage and homeowner’s insurance
• potential homeowner association fees.

Reserve savings after your house purchase

From a lending standpoint, there aren’t any requirements stating buyers must have cash reserves remaining after the purchase of a home. It’s possible to spend every penny of available cash on buying your home. However, it’s not a wise move.

It’s best to set up an emergency fund to deal with unexpected expenses. Your fund doesn’t need to have a lot of money, but certainly enough to deal with things like surprise house or car repairs which can’t be ignored and will likely cost money.

Most people don’t have any significant savings and rely on credit cards to deal with these expenses. Kicking these costs down the road with added interest can often lead to larger financial problems later on.

Make saving a lifelong habit

Make a resolution to set aside some percentage of your income each month to build up your home down payment, create an emergency fund and give you peace of mind saving for your future.

If you set aside 10% of each paycheck, it’s likely that you won’t miss the money, and your savings will grow faster than you think.

Apply online for a Fortress Union Bank savings account

Post updated. Originally published February 2018.

5 STEPS TO BUYING A HOME

Beginning the home buying journey the very first time can be a bit intimidating, but it doesn’t have to be. Here’s an overview of the home buying process in five steps.

Give one of Fortress Union Bank’s mortgage lenders a call to learn more about saving for a house and starting on your path toward homeownership.

The post Saving for a house and other financial considerations appeared first on Fortress Union Bank.

But before you step into any open houses, you should understand what you need to have in order to buy a home. And in today’s housing market, getting pre-approved for a mortgage is essential.

Here’s what you need to have ready to buy your dream home with a pre-approved mortgage.

Saving is essential

Saving is one of the most important prerequisites for getting pre-approved for a mortgage. But it’s the step that can also take the longest.

Most of what you’re saving for are your upfront costs, like the downpayment on a home, closing costs, or maintenance fees. For perspective, you can expect to pay between 5 to 20 percent of the value of your future home for the downpayment. You’re also saving for the new expenses of owning a home, like maintenance and updates you may need to make.

Follow these tips to learn more about saving for your future home.

Get your credit in good shape

Your credit score indicates the probability of you paying back your loan on time. This number is based on your credit history: the number of open accounts, total debt, repayment history, and other factors.

If you’re thinking about buying a home, you need to start building your credit score. You can check out these three tips to grow your credit score today.

Debts

Along the same lines, you’ll need to consider the total debts you have when taking on a mortgage. Your debt and debt repayment history will not only affect your credit score. It will also affect the size of the mortgage you are qualified to have. Lenders might think you’re stretching your finances too thin to afford the payments if your debts are too high.

Calculate how much debt you may owe, like student loans, credit cards, or car repayments, and develop good habits about paying back those debts. Also, make sure you don’t take on any new debt before you start your home buying journey.

Income Verification

Mortgage lenders at Fortress Union Bank advise future homeowners to follow The Rule of Two for their income verification.

When you apply to pre-qualify for a mortgage, you will present proof of two years of employment, pay stubs, savings and checking account history, etc. This will help you build a strong application that reflects reliable income to pay back your mortgage.

Post updated. Original published February 2022.

Want to learn more about what to expect in your home-buying process? Listen to Dream, Plan, Live: the Fortress Union Bank podcast to learn more about getting your dream home.

Related Posts

• How to buy a home in 5 steps
• First-time homebuyers reality check
• Introducing the first-time homebuyers handbook

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Whether you’re a first-time homebuyer or looking for something that better fits your family’s needs, it’s a decision you’ll likely have to consider at some point in your life.

Every person is completely unique, meaning what you decide won’t necessarily match what other people do — and that’s okay! Whatever direction you take, it’s important to compare the benefits that come with building vs buying a house and make the choice based on your and your family’s situation.

To help you compare your options, let’s take a look at the pros and cons of both building and buying a house and inspect the price difference between the two.

Is Building Better for You?

If you’ve looked around at the available housing market and really don’t see a home that sparks your interest, then maybe the right choice is to build your own. When you create your dream home from the ground up, you get complete control over what the house looks like both inside and out, making it a prime choice for families who want unique elements or additions that other homes may not have.

In fact, 1,330,000 building permits for new residential construction were granted in 2022 alone, according to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.

Advantages to Building a Home

But, it’s not just the ability to design the building’s blueprint and floor plan that makes this an attractive avenue — there are several other factors that play into this option’s favor. Here are a few of them:

• Customization: When you build a home, you have input on the design and can ensure the final construction includes all the features you want and need. During this process, you can work closely with the designers and architects to ensure the new construction meets your expectations.
• Up-to-code: Newer homes are built to meet all current building codes, and you have the ability to make sure that your home includes energy-efficient features that will save you money in the long term. Getting an existing home to meet the proper requirements can sometimes be costly and challenging, so building one from scratch prevents this headache altogether.
• No competition: Currently, demand for an existing house is higher than the number of homes available for purchase, meaning prices have gone up and competition is fierce. Houses are on the market for shorter time frames, and you’re more likely to face competing bids. When you build a home, you eliminate that competition — once you own the plot of land, it’s yours for good.
• No need for immediate repairs or renovations: You won’t have to worry about scheduling repairs to fix issues found during a home inspection. You also won’t have to budget for renovations to add features to the home because these will be built into the space already. Your custom home will most likely come with a warranty which should cover any repairs that do come up during the first year after the house has been built.
• Potential for a higher return on investment: Typically, there’s a higher demand for newer homes, so if you ever choose to sell, the value of your home may be much higher than that of older homes on the market.

Disadvantages of Building a Home

Although there are several benefits of building a new house from scratch, it doesn’t come without a few disadvantages. Here are some of the important factors that you should consider before diving headfirst into a building project:

• Unexpected costs or delays: You should receive an estimated cost upfront, but this price is called an estimate for a reason: There may be items or factors that hike up the bill once the project begins. It’s also fairly common to have production delays which can be a result of supply chain issues, labor shortages or any other unforeseen circumstances.
• Expensive financing: When you build a home, you don’t have collateral, which means that loans may be harder to get. They’ll also often come with a higher price tag due to an increased down payment and interest rates. Buying land and embarking on a new construction home generally requires home builders to get a few different loans, including a land loan and a construction loan, all on top of purchasing building materials and paying a traditional mortgage.
• Slower process: You’ve heard the saying “Rome wasn’t built in a day,” and the same can be said for any new home. It takes time to go through each stage of the building process, and it requires a lot of patience. It also takes more time than simply buying a home because you have to delegate work to several different people to complete various parts of the project.

Is Buying Better for You?

After looking at the pros and cons of building a house, you may feel that buying an existing home is the better choice for you and your family. This is often people’s first thought when they want to call a space home. Just like building a new home, buying an already-built home comes with its advantages and disadvantages.

Let’s assess if this is the right course of action for you by looking at all the facts.

Advantages of Buying an Existing Home

A home is a huge investment, but it can be worth every penny if you find the right place. When it comes to buying a pre-existing home, here are some of the benefits you can expect to enjoy:

• Lower cost: On average, buying an existing home is much cheaper than building one yourself. That’s because you can avoid all the extra expenses that come with the building process, like land loans, construction loans, construction fees and unexpected price increases, to name just a few. With this option, you’ll be working with fewer people throughout the process, making it easier to keep the cost manageable and low.
• Takes less time: Building from scratch can take months (or years), depending on the home’s design. Buying and closing on an existing home can be far less time-consuming, and you’re able to move in as soon as you’ve closed on the house. Although it does still take a good amount of time, that’s simply because you want to guarantee you’re making the right choice and taking every precaution. According to Zillow, it can take about four and a half months to purchase a house from start to finish, but this timeline can obviously vary depending on the situation.
• Convenience: When building a new home, you have to consider every detail, including where to purchase land, the home’s design and all of the fixtures, trims and features you want to include. These decisions are already made when buying an existing home, which can make it a less stressful process.
• More room for negotiation: A real estate agent can help negotiate the price of an existing home so you get the best deal possible. There’s less space for negotiation when dealing with contractors tasked to build a new home, but you have some wiggle room when working with a homeowner interested in selling their space.
• Can make upgrades over time: While an older home may not have every feature you want, you can take time to make upgrades as they become necessary and as you’re able to afford them. Once you buy an existing home, you have the freedom and flexibility to make it your own within your budget and time availability.

Disadvantages of Buying an Existing Home

Although buying a home is such an exciting time, there are cons to choosing this method over building your own. Here are a few factors that you should think about before purchasing an existing space:

• Finding the right option: The housing market is a somewhat stressful world to enter. The demand for existing homes is at an all-time high, and people are snatching properties up the minute they become available. That makes finding your home sweet home a particularly difficult ordeal. It’s also time-consuming to comb through endless trusted home-buying sites and select one that catches your eye and meets your budget.
• Not customizable: There’s no such thing as a perfect house, but building your own allows you to get pretty close to that. By purchasing an existing home, you don’t enjoy the same level of customization that comes with helping a designer draw up the house plans. But, that doesn’t mean there aren’t great homes on the market! With people constantly selling, you’re bound to find a home that fits the bill.
• Less energy efficiency: In older homes, you’re most likely not going to have the latest and greatest energy-saving appliances or technologies installed, which can increase energy and utility prices. Although new construction gives you the freedom to personalize your sustainability efforts, there are still ways to lower your costs in existing homes.
• Maintenance: Sadly, purchasing a home that’s been standing empty for at least a few years will most likely mean something will break or need repairs. Whether you buy a house that’s been around since the 1920s or get one that was built last year, houses need regular maintenance and upkeep to continue working properly. This can result in extra expenses that you didn’t see coming when you bought the home.

The Cost Difference Between Building and Buying

Even after comparing all the pros and cons of both building and buying a home, your decision may come down to cost: What’s going to work best for your budget in the long run? The cost is an extremely important factor to consider — you definitely don’t want to overspend on a project or mortgage that leaves you in debt for years to come.

So, what’s the cost difference between buying a home and building one? Obviously, this number varies based on your location, desired home type and timeframe, but we’ll be looking at the national average cost of built and bought homes.

According to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, the average price of houses newly built for homeowners and financed through a mortgage is $528,000, and the median sales price of new houses is $442,000.

As for the average cost of existing houses in the United States, the National Association of Realtors found that to be about $366,900. This is a 2.3% increase from December 2021’s average price, due to the rise in house prices over the past year. Now, this average cost is for all different house types, from one bedroom to seven — so, it may not reflect the actual prices that you’re seeing in your area.

Which Option Is Right for You?

With that knowledge in mind, if you’re attempting to keep your cost lower, then buying an existing home may be your best bet. In addition to being less expensive, you can also close on the home faster, endure less stress and decision-making and make adjustments over time as needed. But, if you’re really want the freedom to customize your home’s design and layout, don’t mind having a longer project time frame and desire a completely sustainable and updated space, then building a home is probably the correct choice for you.

Essentially, it all boils down to your budget, your necessary timeline and the aesthetics that are important to you. These factors (among others) will help you make the right decision. And, don’t stress! Buying or building a home is a huge investment in terms of time, energy and finances, but it’s also a very exciting decision to make.

Beginning the home-buying journey for the very first time can be a bit intimidating, but it doesn’t have to be. Check out the First-Time Homebuyer’s Handbook; it takes you through every step of the process, from pre-qualification to move-in.

Whether you decide to buy an existing home or build new, we can help you with financing. Talk to a Mortgage Banker so you know what to expect.

Post updated. Originally published June 10, 2019.

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In fact, experts agree buying a home in the off-season might even be the BEST time to buy a home—if you can swing it.

Less competition

The first reason is obvious. The competition is minimal. People are busy with post-holiday plans, some are bundling up, not even venturing out as often to grocery shop. Nationally speaking, the months of May, June, July, and August make up a whopping 40% of existing home sales, while January and February account for a paltry 6%. Many sellers know this, and just don’t bother listing. But what about those houses out there for sale all prepped and ready for you to tour?

Although bidding wars are not as common as they once were, winter can still knock the wind out of the competition, permitting you to be a bit more selective with your home purchase. While a bigger seasonal inventory means a larger pool of home to choose from, your chances of successfully buying any home are higher when it’s at least a tad chilly if not frosty. Fewer buyers mean fewer all-cash, over-asking offers—making your traditionally-financed offer more appealing.

More serious sellers

Sellers who go to the trouble of listing this time of year are serious types. They may have to relocate for business or have compelling reasons to move quickly than their warm weather brethren, giving you, as a buyer, the upper hand. Your Realtor is an expert at studying how long each listing has remained on the market before showing it. The longer they linger, the better chance of a negotiated deal you may not have gotten when the grass started greening. You’ll want to consult with your agent on an appropriate negotiation strategy.

Winter inspections reveal different issues

Winter reveals all. Your home inspection may turn up items never found during the dry, balmy months, offering you the perfect opportunity to evaluate the property under the worst conditions possible as well as leave you fewer surprises a year from now, once you’ve been in the home awhile. Drafty windows, suspicious ceiling stains, furnace efficiency, how effective the insulation is — it all allows you to know better what you are buying and may even give you the leeway to negotiate with the seller to deal with it before you move in or offer you a credit in escrow to deal with it.

More competitive moving expenses

Another advantage is potentially getting a better quote on moving expenses since you aren’t competing with a hundred other moving households.

Faster buying process

Need a quick move? Spring and summer has mortgage lenders and escrow and title personnel scrambling. But while Santa is putting away his sled, things slow down to a snail’s pace for them comparatively speaking, permitting you to close your loan faster.

And while others are just beginning to tickle their laptop keyboards to see what’s out there, you’re already drinking a hot chocolate in front of your new fireplace.

Source: TBWS

Post updated. Originally published January 8, 2020.

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Whether you want to fix a new house or spruce up your forever home, renovation projects can quickly add up. But there are financial services your bank offers that can help make your dream space a reality without breaking into your savings.

What is a HELOC?

HELOC is an acronym for Home Equity Line of Credit. HELOCs allow you to draw funds whenever needed and repay what you borrow with an Adjustable Rate Mortgage, which means it’s a mortgage with a variable interest rate. A variable interest rate means your interest rate grows over time instead of being locked into one interest rate for a borrowing period. That’s why HELOCs typically have lower interest rates than personal loans.

HELOCs are designed to maximize your house equity to increase its value. They’re best used for ongoing home projects, like kitchen renovations.

How do they work?

A Home Equity Line of Credit is a loan that borrows against your home’s equity to access cash reserves for your home. Equity is your home’s value minus the amount you owe on your primary mortgage.

This means that instead of taking out unsecured debt with a higher interest, like when you use a credit card, it’s a secure line of credit. It’s taking out a mortgage against your property value.

You can also take out a HELOC if you do not have a mortgage, meaning your HELOC would become your primary mortgage.

When you have access to a HELOC, you can draw credit and repay all or some of it monthly.

Why are they beneficial?

The most practical aspect of HELOCs is that they’re flexible for borrowing and paying back.

Let’s say you take out a $20,000 HELOC for a home improvement, and you know that a project with be $5,000. That gives you a lot of room in case an expected expense arises in your project, or you want to use it for something else during your term.

You can also make interest-only payments. At Fortress Union Bank, our HELOCs are on a 10-year term. So let’s say in those ten years, your furnace goes out. You have funds available to get that fixed.

Talk to a mortgage banker about a HELOC

Are you ready to make your house value work for you? Learn more about how to make your dream home with our Dream, Plan, Live episode, “Did You Buy A Haunted House?”.

The post What is a HELOC? And, how can it help you build your dream home? appeared first on Fortress Union Bank.

Whether you’re shopping to buy or improve your first home, your expanded home, or your everything- I’ve-always-wanted home, the list of popular features for you to consider has vastly expanded.

So, while you’re making your budget, consider:

1. A System to Keep You Safe and Sound

Installing a high-quality security system allows you to monitor your home when you’re away and alert you to danger when you’re home. Today’s systems offer high-performing cameras with motion sensors, outdoor security lights with LED bulbs, smart locks, smoke and carbon monoxide detectors, and a doorbell with a camera (just to name a few components) which can all be controlled from your connected device(s).

2. Heated … Everything!

You know what winter weather in the Upper Midwest entails:

• Shoveling your driveway and sidewalks
• Walking around barefoot on cold flooring
• Stepping into your garage and being greeted by the winter air that’s creeping in through the cracks in your garage door …

More and more homeowners are choosing to install heated driveways, sidewalks, garages, and floors. They offer the double benefit of more safety and a more luxurious living space.

3. Clean Technology with Benefits

A growing number of consumers are adopting clean technology, so you can expect to see a rise in the inclusion of solar panels, tankless water heaters, even electric charging stations in residences. The trend is clear to see when you consider the long-term benefits: saving on energy costs, reducing your carbon footprint, and increasing your property value.

4. Temperature Control on Your Schedule

A smart heater can turn down the heat when you leave for work and turn it back up a little before you return, so your home is comfortable, and you save on heating costs.

5. An “All the Fixings” Kitchen

Touch-screen refrigerators have a lot of impressive features. For starters, many models can connect with, and be used to control your phone, computer, TV, smart doorbell, and thermostat. Want to stream music while you cook? No problem. Forget to make a grocery list before leaving for the store? Just peek inside your fridge from anywhere through your connected device to see what you need. Many of these refrigerators also allow you to keep digital notes, reminders and messages on them (no more sticky notes!).

Side note: As part of your kitchen, you may also consider a smart oven that can be operated from anywhere. There are even cooking robots that can prepare meals for you!

6. Super Showers

Upgrade your bathroom by installing a shower cabin with multiple functions. Some systems offer voice command to control your water pressure and water temperature, and to let you listen to music while you shower.

7. Pet Playrooms

For your furry friends you may want to install food and water dispensers that are programmed to discharge at specific times. You may even consider building a designated indoor play area for them when it’s cold, snowing or raining outside.

8. An In-Home Central Nervous System

Future smart homes will optimally manage the use of water and electricity, as well as detect issues such as leaks and automatic shutoffs. You’ll be able to manage your home from anywhere through apps on your connected device(s).

Through remote access, advanced security, lighting control, automated window treatments, and distributed audio, an advanced home network acts as your smart home’s functionality coordinator, integrating the different components of your automated system so they work together.

Whatever your goal — to buy, build or update your house — the home of your future will almost certainly be more convenient, more efficient, and a little more fun to live in!

Fortress Union Bank offers mortgage loans, home equity loans, HELOCs, and construction loans to fit your needs. Contact us for more information or talk to a mortgage lender.

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Whether you’re looking for the right time to buy a new home or you want to refinance your mortgage, it’s essential to learn about what home refinance rates are, how they change, and how they can help you have a smarter, brighter financial future.

What Is Refinancing?

Your mortgage rate is the interest you pay with a mortgage, or a loan, for your house. When you refinance your home, you’re essentially applying for a new mortgage. The new loan subsequently pays off your old one. This is an enticing option because the new mortgage often comes with better terms that will help lower the amount of money you’re paying in interest.

But securing better terms isn’t the only reason you might want to consider refinancing. If you’re withdrawing equity from your home, then a cash-back refinance is the right move to make. With the money you get from your home, you can then use it to make a big purchase, such as a new car, or pay off any form of debt under your name.

Refinancing means you’ll have plenty of options for deciding what to do with the money you earn back or save.

Refinancing can help you save money.

Important Things To Know

Before you approach a mortgage lender about refinancing, there are some questions you need to ask yourself to make an informed choice.

First, calculate what refinancing will cost you. From time spent talking with lenders to the fees lenders will always charge, it’s best to get a clear picture of exactly how much you’ll have to pay to refinance. Other expenses may include appraisal fees, insurance, and application dues.

Another question you’ll want to discuss with a tax advisor is to see if your taxes will be affected. Every year, you’re able to deduct mortgage interest on your returns, but by refinancing, you’re also securing lower rates. As a result, your yearly tax returns may be affected.

Then, you’ll want to stay up-to-date on mortgage rates themselves. You can stay informed of weekly rates by contacting your lender and also checking with popular sources for this information, such as Freddie Mac’s weekly Primary Mortgage Market Survey.

Freddie Mac writes an end-of-week overview of rates to help you stay up-to-date on the market – if rates are increasing, decreasing, or remaining relatively the same. Historical data can also help you make a better-informed decision regarding financing.

Why You Should Refinance

Ultimately, refinancing helps you save money by paying less interest. The money you save can be diverted into other areas in your budget, like a retirement account, your child’s college fund, or paying off debt. You may even find it beneficial to pay more on your monthly mortgage payments to shorten the time it takes to pay the loan off.

Do you have more questions about mortgages or refinancing? Contact your neighborhood mortgage bankers at Fortress Union Bank.

Originally published August 2016.

Related Posts

• How does a home appraisal really work?
• Should you pay off your mortgage early?

The post What You Need To Know About Refinancing and Why It’s A Smart Financial Move appeared first on Fortress Union Bank.

The average buyer who uses the internet to help their house hunt spends 10 weeks evaluating various available homes, according to the National Association of Realtors.

After that, the mortgage closing process takes 47 days, on average, from the time a prospective homebuyer applies for a loan to the time they receive the funding, according to ValuePenguin.

Beginning this process for the very first time can be a bit intimidating, but it doesn’t have to be. Here’s what you can expect from the homebuying process, in five steps:

Step 1: Get pre-qualified for a loan

Your first home will likely be one of the biggest purchases you’ll make in your life. Approaching this process with a clear idea of how much house you can afford will help you make smart money decisions.

Pre-qualification is a process you’ll work through with your lender to evaluate your current financial situation, assess how much cash you can put toward your down payment and other upfront expenses, and how much your monthly payments will be.

Getting pre-qualified isn’t difficult. There are several ways you can go about it:

• Online: Many lenders today, including Fortress Union Bank, have options to start the pre-qualification process online. Check out our Mortgage Center to begin the application process online with Fortress Union Bank.
• Phone: For those who are more comfortable discussing the process over the phone, Fortress Union Bank customers can call claimsdept@fortressunion.com to speak with a Mortgage Lender who can explain all the components of pre-qualification.
• In person: Finally, customers can visit their local Fortress Union Bank branch to speak face-to-face with a Mortgage Lender about pre-qualification and the overall loan approval process.

To become pre-qualified, you’ll need to provide the lender with some information about your current financial situation, including proof of income, proof of assets and more. This will help them evaluate how much you can afford to spend on your home.

Some required documents you’ll likely need include W-2 statements for the past two years, bank and investment account statements, and your credit report (which the lender can pull for you if you give them permission to do so).

The result of this process is a pre-qualification letter, which will outline how much money the lender is likely to approve you for. It may be exciting to see the dollar amount on paper, but before you go out house hunting, keep a few important things in mind:

• Pre-qualification is not a guarantee. When you apply for a loan, you may actually be approved for less than the amount listed on your prequalification letter.
• You don’t have to spend all the money you’re approved for. Buying a home for less than you’re approved for may help you save money and remain financially healthy.
• Changes in your financial situation can impact your ability to get a loan. If you have a change in employment or income, or if you spend or receive a large sum of money, tell your lender right away.

Step 2: Shop for your new house

Once you have a clear idea of how much home you can afford, you can begin seriously house hunting.

But before you begin, consider the things you want and need in a home. As yourself questions like:

• How many bedrooms do you need now, and how many will you need in five years?
• How long of a commute to work, school or amenities are you willing to take?
• What home features can you not live without?
• Are you willing to pay homeowners association fees?

For most homebuyers, a real estate agent plays a big role in helping them find the perfect home. In fact, 16% of homebuyers in 2019 contacted a real estate agent before they began looking at homes online, according to the NAR. These professionals have access to databases filled with information about which homes are for sale, and even homes that haven’t yet gone on the market but will soon be listed.

Prospective buyers may not be able to attend open houses in the same way that buyers in the past have, due to restrictions pertaining to the coronavirus pandemic. Virtual open houses may be a good alternative option to learn about various homes on the market.

Step 3: Make an offer

Once you’ve found a great home you can see yourself living in for the foreseeable future, it’s time to make an offer.

This is your opportunity to state how much you’re willing to spend on the home, and to list out contingencies, or events that will negate the offer. According to the  Zillow Group Consumer Housing Trends Report 2019 survey, 74% of people put contingencies in their offers.

Some common contingencies homebuyers list in their offers include:

• Inspection contingency: Offer depends on positive results from a professional home inspection.
• Appraisal contingency: Offer depends on the appraisal indicating that the offer is in line with the fair market value of the home.
• Financing contingency: Offer depends on the buyer securing a mortgage.

Once you’ve made your offer, it’s time to arrange an inspection and appraisal. Feel free to accompany the professionals conducting these assessments, and to ask questions along the way. The more you know about the home ahead of time, the better.

Step 4: Finalize your loan

Finally, you will once again speak with your lender. If you were pre-qualified ahead of time and your financial situation hasn’t changed, the process of finalizing your loan shouldn’t take long.

However, you may still need to provide additional documentation that explains your financial situation, such as tax returns for the past two years, a Gift Funds Letter (if you’re using gifted money in the purchase) and the purchase agreement for the home, including all counter offers, addendums and earnest money checks.

Your lender will likely review different types of home loans with you. The most common mortgage type is the 30-year fixed-rate mortgage. This type of loan will give you the same interest rate for the entire 30 years of the loan, which makes budgeting simple.

Other types of mortgage loans may have:

• Different terms, such as 10 or 15 years.
• Adjustable rates, which means the interest rate may fluctuate annually based on market conditions.
• Specific requirements, such as USDA loans in rural areas of the country, or VA loans for veterans or active-duty service members and their families.

Once you and your lender determine the best mortgage for your situation, you can finalize the loan. Soon, you’ll receive the keys to your new home.

Step 5: Get homeowners insurance

It’s wise to get a homeowners insurance policy as soon as possible; you may even begin researching these prior to finalizing your purchase.

In some cases, homeowners include insurance contingencies in their offers to protect them in instances where they can’t obtain coverage for certain events, such as earthquakes in areas where these are common, or toxic mold in homes with a history of this issue, NOLO explained.

Homeowners insurance will protect you financially in the event that your home sustains damage or becomes unlivable because of a disaster. Having this coverage in place from Day 1 of homeownership can provide you peace of mind that your investment is protected against the unexpected.

Fortress Union Bank makes the process of getting a homeowners insurance policy simple. Our mortgage and insurance professionals work closely together to ensure you have the right coverage for your needs.

Looking for more information about the homebuying process and how Fortress Union Bank can help you along the way?

Check out The First-Time Homebuyer’s Handbook; it takes you through every step of the process, from pre-qualification to move-in.

The post How to buy a home in 5 steps appeared first on Fortress Union Bank.

But when you look past the anxiety and the gauntlet of decisions that come with homebuying, you’re left with the excitement of having a parcel of land to call your own. The trick is knowing how to get to that point as painlessly as possible. 

Step one? Learn as much as you can about the homebuying process before you begin your search. The more you know about what you’re getting yourself into, the fewer surprises you’ll encounter, and the smoother the process will feel. 

To that end, we’ve put together an introductory handbook that goes through each phase of the homebuying process, step by step. 

A few things to keep in mind first

Saving is key

Nearly 35% of first-time homebuyers in 2019 said that they felt financially insecure after closing, according to research from NerdWallet. Ideally, by the time you make your down payment, you will have enough money saved to get you through a pinch such as an unplanned visit to the mechanic or the vet. 

While putting more money down can reduce the amount you pay in the long run, you still have to be able to pay your mortgage and cover other costs of living. A few ways to start saving for a down payment include:

• Paying off your existing debts. 
• Paying credit cards in full each month to avoid high interest rates. 
• Making a monthly budget to help identify cost-cutting opportunities. 
• Opening an interest-bearing savings account and contributing a portion of each paycheck to it. 
• Putting most if not all of your tax refund each year into savings. 
• Keeping a change jar (every penny counts!).

For financial-planning purposes, a general rule of thumb is to spend no more than 25% of your monthly income on your mortgage payment. If you anticipate that being a problem as you explore your mortgage options, you may need to reconsider the repayment terms.

Your first offer may not be your last

It’s not unusual to have to make multiple offers on the same property, or even make offers on multiple properties. This is just a reality that comes with shopping for a home, especially in highly competitive markets. 

In fact, the first-time homebuyer in 2019 made an average of 3.8 offers before having one accepted – and many of those homebuyers exceeded their budget. 

So, for your own sanity, mentally prep yourself for the possibility that your first-choice home might get away from you. 

Otherwise, remember: Don’t offer more money than you feel comfortable with. 

Get the free handbook

Without further ado, just click on the button below to get your copy of “The First-Time Homebuyer’s Handbook” and get your crash course in shopping for your first home.

The post Introducing the first-time homebuyer’s handbook appeared first on Fortress Union Bank.