Forget Mortgages: Here’s What You Really Need to Know Before You Buy a Home
Imagine getting the benefit of hindsight before you buy your first home. You know, get a glimpse of all that wisdom you only pick up after you’ve gone through the entire process. We thought that would be helpful, too, so we tapped our best experts to share their “things I wish I knew before I bought a house” tips - just for you.
The panel? A group of MHV staff who were happy to let you in on their firsthand home-buying experience.
Take advantage of their hindsight as you prepare to buy your first home.
1. I Wish I Had Known There Were Homebuyer Programs
It’s not unusual for first-time homebuyers to learn about homebuyer programs…after they buy their home.
“By the time we learned about [the programs], we already saved for our down payment, started our home search, and were ready to buy.”
~ Amanda R., Knowledgebase Support Specialist
Homebuyer programs are designed to make owning a home more affordable for more people. Very often these programs have low or no down payment requirements or provide grants to help pay for closing costs. These programs typically include stipulations around:
It’s important to talk to your lender to determine your potential eligibility for a homebuyer program, regardless of whether you think you qualify. They may know about additional programs that can help you. Remember: start that conversation at the beginning of your home-buying journey so you don’t miss out on a chance to save a substantial amount of money!
You have access to several homebuyer programs here at MHV! Learn more about them here.
2. I Wish I Had Known More About Different Mortgage Types
If you’re in the market for your first home, you have at least a basic understanding of mortgages. There are a variety of mortgage options available, though, and many first-time homebuyers aren’t aware of that.
When we think of mortgages, we typically think of the 30-year fixed option. This is the traditional mortgage with a fixed rate and a 30-year term. Beyond that, though, homebuyers can look at:
15-year fixed-rate mortgage. Similar to the 30-year fixed but with a 15-year term. This will make your payments higher but let you pay off your home sooner.
ARM, or Adjustable Rate Mortgage. An ARM has a variable interest rate that will change at designated intervals throughout the term of your mortgage. The upside of an ARM is that your initial interest rate tends to be relatively low. The drawback, of course, is that your rate may go up.
$0 Down Mortgage. Some lenders, including MHV, offer $0 down mortgages. These are great for first-time homebuyers who may not be able to save up for a down payment.
“I wish I had known more about different mortgage types when I was buying my home.”
~ Jess T., Lead Member Service Representative
When you start thinking about buying your first home, talk to various lenders to learn about their mortgage products. You may find one option better suits your financial situation.
Get the ultimate guide to navigating the home-buying process!
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Learn more about mortgage types
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3. I Wish I Had Known How Expensive Furnishing My Home Would Be
When we think about buying a house, we tend to zero in on the actual cost of the mortgage and taxes. But you could face a heap of expenses right after buying, including new furniture, necessities like curtains, even lawn and garden maintenance equipment.
“Don’t underestimate the cost of new necessities. Curtains or blinds, a new lawnmower, washer and dryer, paint and materials for walls, and other maintenance stuff adds up quick.”
~ Matt C., Financial Analyst
Prepping for these expenses should be part of your planning stage. When you’re saving up for your down payment and closing costs, tuck money away into a savings account reserved for your new home expenses. You can use a money management tool like myMoney Trail
to set and manage your savings goal.
4. I Wish Everyone Had an Awesome Realtor
Realtors can be a tremendous asset, especially if you’re buying your first home. Aside from their knowledge of the areas you want to live in they can guide you on what you should look for in a home, potential missteps, and price points of comparable homes.
“Don’t be afraid to let your realtor know that you may require some hand-holding, have tons of questions, and may need things explained in detail.”
~ Michael C., Business Development Officer
Additionally, a realtor can help you with the negotiation process. They are skilled in helping you navigate how to prepare an offer and the potential back-and-forth with the seller.
To find a realtor near you, click here.
5. I Wish I Had Known How Expensive Owning a Home Really Is
Probably the biggest shock to new homeowners is the cost associated with owning a home. Most people will budget for their mortgage payment and estimate their utility payments. But there are a lot of incidental and unexpected costs that take homeowners by surprise.
“I thought I had a budget in place but there were other things to consider like snow removal, service plans for the furnace, appliances that wear out, and emergency fixes.”
~ Charles B., AVP Asset Protection
When thinking about how much owning a home will cost you, consider:
Yard maintenance. How often will you need to have your mower serviced? Or will you hire a landscaping company?
Snow removal. Are you going to need a snowblower?
Oil heat. If your home has oil heat, how much is it going to cost to fill the tank?
- Insulation upgrades. You may find your windows and doors are too drafty in winter.
Emergency repairs. Everything from your garage door to your water heater may need repair at some point.
“The down payment and closing costs are important, but that’s just the beginning. There are a lot more expenses to owning a home.”
~ Chris C., Chief Financial Officer
Also keep in mind that, even if you have a fixed-rate mortgage, your monthly payment may increase year-over-year. Your monthly payment will often include an escrow payment, or the special account that your lender then uses to pay your taxes and homeowners insurance. As your taxes increase, your lender will need to collect more money from you to pay them. This will increase your monthly payment.
Join our Mortgage Expert Denise Quinn as she walks you through the entire home buying process! Our on-demand webinar also highlights how you can earn $14,500 towards your down payment and closing costs! Watch it Now
The cost of owning your home shouldn’t scare you, but it should help you recognize the financial responsibility homeowners have.
As you start and proceed on your home buying journey, keep these “I wish I had known” tips in mind to help you be as financially ready as possible for your first home.