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Personal and Business Banking

Things Every First-Time Homebuyer Should Know

Homebuying and Mortgages

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Things every first-time homebuyer should know

The prospect of buying a house for the first time can be intimidating – especially since it's the single largest purchase you may ever make. Before you begin the search, there are some things you should know.

Look for information

Thoroughly review the StreetWise Homebuying Guide and StreetWise Mortgage Guide. The information you'll read can save you a substantial amount of money and aggravation before and after the purchase. You'll find more detail on the points we raise below.

Research the process by attending community-sponsored classes. Each year, DCU holds first-time homebuyer seminars. Also, check out books such as Home Buying For Dummies by Eric Tyson and Ray Brown, (IDG Books Worldwide, Inc.).

Save for the down payment and closing costs

Strive to save as much as you can towards the purchase price of the house as well as closing costs. Though minimum down payments start around 5%, the greater your down payment, the more favorable your terms. If you can purchase a home with at least 20% down, you won't need to buy private mortgage insurance (PMI).

A Note About PMI and DCU – DCU will do everything possible to help you avoid paying PMI, even without the industry standard of 20% down.

Discover how much you can afford

Make sure you are saving enough toward retirement and other goals when deciding how much to spend each month on mortgage payments.

Don't forget the other costs of home ownership

Remember to plan for homeowner's insurance, property taxes, private mortgage insurance (if required), utilities, repairs, and maintenance.

Choose a mortgage

There are many options out there including traditional fixed-rate mortgages with terms up to 30 years, and adjustable rate mortgages (ARMs).

Research neighborhoods

Prioritize what you are looking for in a neighborhood. Then talk to the people who live in the neighborhoods you're considering. Neighborhoods with highly-rated public schools tend to be more expensive. That's critical if you have school-age children. Plus, communities with good schools have higher property resale values.

Hire a real estate agent

Get referrals from friends, relatives, and co-workers, and then interview several agents. You want an agent who's familiar with the neighborhoods you're interested in. Listen to your agent, but make your own decision. If you are shopping in Massachusetts or New Hampshire, DCU Realty has agents that can help you.

An agent's job is to know how much properties are worth, facilitate the sale process, and bring your offer to the seller's agent. Unless you have chosen a buyer's agent compensated directly by you, the agents on both sides of the sale work for and are compensated by the seller. They earn a commission based on a percentage of the sale price. The more you pay, the more money they get. Consider what they say within that context.

Have the house inspected

Hire a full-time, professional home inspector. Again, referrals from friends, relatives, and co-workers are a good place to start. The Better Business Bureau can also provide information. Be wary of recommendations from your real estate agent. It's in the agent's interest that the inspector not find problems that would block the sale.

Consider a full survey

Land surveys associated with home sales are not detailed and may not uncover a disputed property line. Title insurance doesn't cover boundary line disputes. If there's any question, a full survey could save you thousands down the road.

Prepare for closing

Your loan officer will prepare an estimated list of closing costs, along with your down payment, and you need to make sure you have enough money set aside to pay them.