While experts may weigh in on which way the housing market will go — the truth is no one knows for sure. As a potential buyer, focus on the things you can control, like having enough savings, a good credit score and enough income to cover your new mortgage payments.
Use a mortgage calculator to factor in an estimated home price, down payment amount and interest rate to figure out what those payments will be. Once you have a budget in mind, you can think about moving forward.
Explore All Your Mortgage Options
There are many home loans on the market today.1 Here are just a few:
- Fixed Rate
The most popular choice with consumers is a fixed rate loan because the monthly principal and interest payments remain the same over the life of the loan.
- Adjustable-Rate Mortgage (ARM)
In a rising rate environment, an ARM offers a lower starting interest rate at the beginning of the loan period — as much as 10 years — as compared to a fixed-rate mortgage. After the initial fixed period, the interest rate will vary.
- FHA
An FHA loan, insured by the Federal Housing Administration, offers a low down payment. It's also more flexible with credit requirements making it easier to qualify for. Borrowers can also use gifted funds to help with the down payment.
Choosing the Right Loan
Of course, getting the right loan all depends on your personal situation. That's why making an appointment with a home loan consultant can be helpful. You'll learn more about the types of loans that may be right for you, and discuss financing, closing costs, discount points and any additional fees to help you decide.
Costs to Buy Your Home
When you're ready to buy, these are the costs you are responsible for:
- The Down Payment
The National Board of Realtors1 reports the average down payment in 2021 was 7% for first-time homebuyers and 17% for repeat buyers. Many loans offer down payments as low as 3%.
- Closing Costs
On average, closing costs range between 2% to 3% of your total home purchase price. You'll also pay fees for the loan origination, appraisal and survey, title, closing and escrow fees, and homeowners insurance. If your down payment is less than 20%, you'll pay for private mortgage insurance, or PMI. FHA loans include an upfront mortgage insurance premium, as well as monthly mortgage insurance payments.
Ongoing Expenses
Another part of the homebuying journey is budgeting for the costs to live in and maintain your home.
These include:
- Monthly mortgage payments.
- Homeowners and mortgage insurance.
- Property taxes.
- Maintenance and repairs.
- HOA fees, if applicable.
Get Expert Advice
Our SchoolsFirst FCU Home360® program pairs you with a loan consultant and real estate agent who are here to help you through every step of buying your home.
NMLS Identifier: 405503
- Source: National Realtors Confidence Survey. 2. All loans subject to approval. Programs subject to change.
