Buying a home for the first time is an exciting milestone. To truly be able to enjoy this special moment, you must be prepared for each step of the home-buying process. From saving for a down payment to crossing the threshold of your new home, Capital Credit Union (CCU) wants your journey to go as smoothly as possible. With that in mind, follow these tips we’ve created especially for Wisconsin first-time homebuyers.
Save for the Down Payment
Before you start searching for your home, plan to set aside some money for a down payment. While there are down payment assistance programs available for Wisconsin first-time homebuyers, it’s to your benefit to put as much money down as possible.For example, most conventional loans require you to make a 20 percent down payment toward your home loan purchase to avoid paying for private mortgage insurance (PMI) on top of your monthly mortgage payment. On the other hand, if you’re able to put 20 percent down, you’ll be able to avoid PMI, lower your principal balance, and possibly qualify for a lower interest rate—in turn, reducing your monthly payment. Saving for a down payment now can save you a lot more in the future.
To start saving for your down payment, follow these steps:
1. Determine How Much to Save
Use a mortgage calculator to determine how much home you can afford. Then calculate 20 percent of that amount to find out how much you’ll need to save.
2. Find Room in Your Budget
Set aside money each month for your down payment. There are lots of strategies you can use to save for a home purchase, such as cutting back in certain areas to free up more room in your budget.
3. Automate Your Savings
Set it and forget it. When you automate your savings, you won’t be tempted to spend the money you’ve earmarked for your down payment.
Decide how much you’re going to save each month and then set up an auto transfer from your checking to your savings account for that amount.
4. Accelerate Your Savings
Put any extra money that comes in toward your home savings. This could include a raise, a bonus, side hustle income, or an unexpected windfall.
5. Open a High-Yield Savings or Checking Account
Grow your money even faster by opening a high-yield savings or checking account. Check out CCU’s savings and checking account rates, or learn about our ChaChing Checking account, and do more with your money.
Prioritize Homebuyer Education
As you prepare to look for your first home, take homebuyer education courses so you know what to expect. After all, an informed buyer is the best kind of buyer to be!CCU has a host of online resources for you to explore. The Wisconsin Housing and Economic Development Authority (WHEDA) also provides tools and resources for Wisconsin first-time homebuyers.
Shop Around for a Lender
Shop around to find the most competitive interest rate and loan terms.Pro tip? When you shop for lenders within a 45-day time period, multiple credit checks will be treated as a single inquiry, so your credit score is less likely to be negatively impacted.
As you shop around for a lender, compare the interest rates offered by your community credit union to other financial institutions. You’ll often find that credit unions offer more competitive interest rates and loan terms.
Secure Pre-Approval
Before you start touring homes, secure pre-approval from your preferred lender. A pre-approval letter doesn’t lock you into anything with the lender. However, it does serve a two-fold purpose.First, getting a pre-approval letter will help you understand how much a lender is willing to loan you based on your financial situation. You can then look for homes within this price range, rather than falling in love with a home that may be out of budget.
Secondly, securing a pre-approval letter positions you as a serious buyer. This may give you an edge in a competitive market when a seller has multiple offers on the table.
Select a Real Estate Agent
As a first-time homebuyer, it’s wise to work with a real estate agent. If you need some help finding one, follow these tips to jumpstart your search:Ask Friends and Family
If you know someone who has recently purchased a home, ask them about their experience and whether they would recommend their real estate agent.
Interview Agents
Once you have a few in mind, interview agents in person to determine which one feels like the right fit. Be sure to check online reviews and verify license information before making your final decision.
Find Your New Home
Here comes the fun part—touring homes! Before you go on the hunt, make a list of your must-haves vs. wants. For example, must-haves may include a certain location, number of bedrooms, or price point. Wants, on the other hand, are something you may like to have but could likely do without. Think upgraded finishes, walk-in closets, or hardwood flooring.Be sure to communicate your must-haves and wants to your real estate agent. You can also ask them to email you listings so you’re alerted to homes that fit your search criteria as soon as they hit the market.
Make an Offer
Find a home you love? It’s time to make an offer. Of course, you want to score the best deal possible. However, you also want to put in a competitive offer so the seller takes you seriously.Your real estate agent will research comparable home sales in the area. These market insights provide a clear framework for crafting a strong and compelling offer.
Keep in mind that in a competitive market, you may need to put in an offer over the asking price. Lean on your real estate agent for professional expertise and guidance during the negotiation process.
Once your offer is accepted, you’ll be ready to reach out to your preferred lender to start the final mortgage application process. If you live in northeast Wisconsin, visit one of CCU’s local branches to discuss your mortgage options. We’re confident your dream home awaits, and we’ll be beside you from day one to move-in and beyond.