Navigating Mortgages: Your Path to Home Ownership Simplified
Embarking on the journey to homeownership can be daunting as it’s one of the most significant financial milestones in life. For many, it can symbolize stability, accomplishment, and the start of a new chapter. It’s not an easy feat and can often seem filled with complexities and challenges. At Hickory Point Bank, we’re dedicated to demystifying the mortgage process, helping you secure your dream home, and ensuring you’re prepared for the ongoing financial responsibilities it entails. In today’s blog, we’ll deep-dive into a comprehensive guide on how to navigate the waters of mortgages, from initial consideration to being a first-time homeowner!
Step1: Assessing Your Financial Readiness
The first step on your journey is a thorough and honest assessment of your financial health. Start by reviewing your income, your savings, your expenses, and any outstanding debts. A strong foundation for a home purchase includes stable income, manageable debt levels, and emergency savings. Keep in mind, your emergency savings should cover three to six months ofexpenses.
In this step, you’ll also want to check your credit score, as it will significantly affect your mortgage rates. If buying a home is a long-term financial plan for you, you can begin to manage your credit score early, by keeping card balances low and making on-time payments.
Lastly, you’ll want to make sure that you either have saved orhave a clear financial plan to start saving for 20% of the cost of your desired home as a down payment. This ensures that you avoid PMI (Private Mortgage Insurance) and reduces the amountof your monthly payment.
Step 2: Getting Pre-Qualified For A Mortgage
Once you’ve ensured you’re financially prepared for your home purchase and before you start searching for homes, you want to secure a mortgage pre-qualification. This involves working with a mortgage lender to verify your financial information and determine how much they may be willing to lend you. Pre-qualification gives you an even more clear picture of the price range you should be looking for as well as any potential strengths you might have as a buyer.
Step 3: Finding Your Home
With your pre-qualification in hand, you can work with a trusted realtor to search for homes within your budget. Consider your needs, lifestyle, and future plans but, most of all, important financial considerations such as the ongoing maintenance costs of the home, utilities, gas, and any related HOA fees.
Step 4: Applying For A Mortgage
There are several mortgage options available when you’re thinking about buying a home. These include fixed-rate, adjustable-rate, and government-backed loans. Consider your long term financial goals and make sure to consult your personal bank advisors to understand which mortgage loan would best fit your individual situation. Especially in high interest rate environments, making the right decisions with regards to your home loan can have a much bigger impact down the road!
Step 5: Closing on Your Home
While a higher percentage of the closing costs are borne by the seller, as the buyer you still need to be prepared to pay fees such as title insurance, home inspection, appraisal fees, and more.
Step 6:
You’ve closed on your home! Now is when the regular maintenance comes in. Owning a home involves regular expenses beyond just your mortgage. You’ll need to budget for property taxes, maintenance, and insurance as well as variable expenses such as utilities and any home maintenance fees. Make sure to create a clear budget that accounts for these costs, ensuring that you’re prepared for the unexpected!
Common financial wisdom is to make sure you have 3-6 months of your home expenses set aside as an emergency fund. Regularly reviewing your financial plan to adapt to any changing circumstances can help you better understand how much you should put aside to ensure you can meet your financial goals.
Home ownership is within your reach! At Hickory Point Bank, we’re committed to supporting you in every step of the way. From preparation to execution, our team is here to make sure your path to home ownership is as smooth and successful as possible. We want to make sure you’re not just buying a home but, rather, thriving in it for years to come!
