As someone who has been working in the residential lending industry for just over 20 years now, guiding individuals and families through the first-time homebuying process is a responsibility I deeply enjoy, and one I take very seriously.
Buying a home – especially buying your first home – is huge deal. Sure, it can be a bit overwhelming at times, but – with the right preparation – it doesn’t have to be. Here are a few questions to ask yourself in order to make the first-time homebuying process the exciting, momentous occasion it ought to be.

Is this a good time to buy my first house?

The answer to this question will always be dependent on the prospective homebuyer’s individual circumstances, but – generally speaking – the answer is yes, this is as good a time as any to explore homeownership. Interest rates have been trending downward for the better part of the last two decades, and they’re currently at historically low levels.

When I first started my career just over 20 years ago, I remember issuing loans with interest rates as high as 13 percent. Today, it’s realistic to be approved for rates around – or, in some cases, even under – 3 percent. These historically low interest rates are allowing prospective homebuyers to increase their budgets and afford “more house.”

OK, the interest rates are historically low. But the houses themselves seem more expensive than ever. Isn’t it a wash?

Well, not necessarily. Yes, the cost of housing inventory is on the higher end right now (for context: those 13 percent rates I remember issuing 20 years ago were back when you could buy a house for $150,000 or less), but what makes the interest rate such an important piece of this transaction comes down to one word: “fixed.”

Buying a home is a long-term investment, and – in most cases – the interest rate you agree to at signing is the rate you’re committing to over the entire lifetime of your loan. Locking yourself into a low interest rate protects you from changes in the market, and could save you a good amount of money in the long run. Plus, it gives you a predictable, set monthly payment that you know you’ll be able to afford.

I’m ready to get serious.
What’s my first step?

The home-buying process starts with you and your family. Before you start attending Open Houses and falling in love with neighborhoods, it’s important to take an honest look at your financial situation and ask yourself if you’re ready to take this step. That entails setting and maintaining a budget, tracking your spending and understanding your existing debt and credit history. If you decide you’re ready to pursue the goal of homeownership, then it’s time to start the process.

Gather your financial documents and call a loan originator.

Most lenders require prospective homebuyers to provide a packet of financial information along with their application. At Navigant Credit Union, we typically ask applicants to provide:

• Two most recent pay stubs
• W-2 forms for the most recent two years
• Two most recent monthly bank statements
• Tax returns for the most recent two years, if you are self-employed

Think about your down payment.

While there are some mortgage loan products that do not require any up-front cash, first-time homebuyers should typically plan on saving at least 3% to 5% of the total loan to use as a down payment. Depending on your budget, you may decide to increase that down payment in order to decrease your monthly payments.

Gather your team of experts.

You’ll quickly learn that the homebuying process has a lot of moving parts, and each step requires its own level of expertise. Throughout the transaction, prospective homebuyers will work with real estate agents, lending officers, attorneys, appraisers, inspectors and a host of other professionals. It’s important to find a team of experts that you can trust, and who understand your goals and objectives.

Don’t forget about the “little things.”

Remember: The total “price tag” on the house is just one piece of the homebuying transaction. You need to think about (and budget for) items like property taxes, homeowners association fees, insurance, real estate agent commissions and other closing costs.

I found my dream house.
How quickly can I get approved?

As a lender, I need to emphasize that buying a house shouldn’t feel like a race. It’s a big decision, and big decisions should always be made with patience, preparation and intention.

With that said, the honest answer is that you can be approved for a loan almost immediately after submitting your application. We understand that “dream houses” don’t pop up on the market every day, and – assuming your finances are in order and you’re eligible for one of our lending products – our team at Navigant Credit Union will work with you to make that dream a reality on any timeline that works for you.