How to Cut Home Buying Costs

Pair of scissors cuts business expense word COSTS in half to savFor nearly all of us, buying a home represents one of the biggest financial transactions of our lifetime. There’s really nothing that compares to buying a home, since not only do we have to put up thousands of dollars of our own money but we also (usually) have to borrow much more than that.

There’s really no getting around the fact that buying a home is expensive. It takes a lot of financial discipline to save up a down payment and make the monthly payments. Along the way, there are bound to be problems that eat into your savings too. For example, everything from a new roof to a broken water heater is going to cost you. (Of course, renting can also have costly surprises such as escalating rent or being forced to move). While there’s not a whole lot you can do about some of the costs of buying a home, there are ways to reduce your out-of-pocket costs. 

Shop Around for Your Mortgage

One of the easiest ways to cut costs when buying a home is by finding a low interest loan. Get quotes from banks and credit unions so that you can compare their fees and rates. Make sure that you compare the Good Faith Estimate given to you by each financial institution. One thing to note is that you are permitted to get as many quotes as you want within a three-week period. Normally, each quote would be a separate credit check, but when you’re shopping for a mortgage, multiple quotes are considered only one inquiry on your credit reports. 

Check out First Financial Federal Credit Union’s mortgages, featuring great rates and low fees.

Rates as low as 3.375% (3.651% APR) – 15 Years.* A 15 year mortgage of $100,000 at 3.651% APR would have a monthly payment** amount of $708.76.

Rates as low as 4.375% (4.541% APR) – 30 Years.* A 30 year mortgage of $100,000 at 4.541% APR would have a monthly payment** amount of $499.29.

We also have a 10 year mortgage as well – great for refinancing! Learn more here, and apply online today.

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. To be a part of the program, text FIRSTRATE to 69302 and each time our Mortgage Rates change, we’ll send you a text message with the new rates.***

Negotiate With the Seller

If you’re looking to get a portion or even all of your closing costs covered, then negotiating with the seller is your best bet. Depending on the state of the real estate market in your area, you could ask for more or less. If the real estate market is struggling or the property in question has been on the market for an extended period of time you may be able to get the seller to cover your closing costs.

Article Source: http://www.foxbusiness.com/personal-finance/2013/12/16/how-to-cut-home-buying-costs/

*APR = Annual Percentage Rate. Subject to credit approval.  Credit worthiness determines your APR. Available on primary residence only. 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.  See Credit Union for details.

**Payment examples do not include taxes or insurance. Financing up to 80% of value of property.

***Standard text messaging and data rates may apply.

What to Do If Your Credit Score Is Too Low For a Mortgage

first-time-home-buyer-1If you’re preparing to buy a home, you probably know that your credit score is important. Maybe you’ve already been turned down for a mortgage because of a low credit score. Or maybe you’ve recently pulled your credit report, only to realize that your credit is worse than you expected.

Don’t give up on buying a home yet! There are plenty of places to turn if your credit is too low to get a conventional mortgage. But first, you should figure out what lenders expect of your credit score, since you might be surprised to find that you may be able to buy a home with your current credit score.

What do lenders expect?

Lending requirements vary from one lender to the next, but they’ve generally become more strict since the subprime mortgage lending crisis in 2008. As a rule of thumb, though, you’ll need a FICO score of about 650 to get a conventional mortgage – and that’s on the low end.

Remember, the lower your credit score, the higher your mortgage rate is likely to be. This can have a dramatic effect on how much you pay for your home over time. So if you’re sitting on the mid-to-low end of the credit spectrum, you may want to look into some of these options, even if you qualify for a conventional mortgage.

Put More Money Down

Mortgage lenders look at a host of factors when deciding whether or not to lend you money. One of those factors is your credit score. But another factor is your down payment.

With some lenders, you may be able to offset a weak credit score with a higher down payment. With a bigger down payment, you’ll have more equity in your home, which means the lender takes less of a risk when lending to you.

If you’ve got a substantial amount of money in savings, but still have a fairly low credit score, consider applying for a mortgage with a community credit union, like First Financial. Often, these smaller entities operate under more flexible lending guidelines, so you can talk to a loan officer about your situation and maybe get a favorable result.

To speak with First Financial’s lending department, call us at 866.750.0100 option 2, and to learn more about our mortgages – click here.

Work With a Homeownership Counselor

There are some local and national nonprofits that offer homeownership counseling.

Nonprofits like these offer counseling to future homebuyers who need help raising their credit scores or navigating the homebuying process. It may take some time, but with the help of a credit and housing counselor, you can learn which steps to take to raise your credit score and apply for a home loan.

First Financial offers a free Home Buying and Mortgage seminar every year; stay tuned for the 2014 seminar calendar to mark the date! To register for our upcoming free seminars, click on the purple “Attend” icon on the bottom our website. All of our staff is here to help you, if you ever have any questions please don’t hesitate to stop into any one of our branches and see us!

Get Your Credit Score Up

You could also simply take the time to bootstrap yourself into a better credit score. Raising your score isn’t complicated, but it does take time, discipline and hard work. These steps can help get your credit score up so that you can qualify for a mortgage.

  1. Correct any errors on your report, especially late payments or collections accounts that aren’t recorded properly.
  2. Make all your payments on time. Late payments are the # 1 way to ding your credit score.
  3. Pay down revolving debt like credit cards. A high debt-to-credit ratio is another surefire way to lower your score.
  4. Wait it out. As long as you’re paying down debt and making payments on time, your credit score will eventually rise on its own.

Don’t forget to utilize all of our free online financial calculators located here and to improve your credit score, and try our low-cost, credit counseling service, First Score! For just $30 you receive a one-on-one interactive session with a First Financial expert, which simulates your credit score with various “what if” scenarios.

Once you get your credit score, First Score will tell you what you need to do to reach all of your financial goals. First Score will also tell you what actions will help you increase and decrease your credit score.

Ready to try First Score? You can email us at firstscore@firstffcu.com or call 866.750.0100, Option 2.

*Click here to view the article source by Abby Hayes of US News. 

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