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Preparing To Buy Your First Home

Learn more about how to set your expectations and reduce stress about the home buying process.

Buying a home can be a daunting task. The challenges of being a first-time homeowner are intimidating. Let’s take a look at a few guidelines to help take some of the stress out of the decision.

The house you buy may not be forever

Because of the soundness of real estate as an investment, many first-time home buyers tend to want to get the biggest house they can. They may be trying to start families or getting more space for their existing family to grow. Whatever the motivation, buying a house is one of the few times when people try to plan their lives 30 or more years down the road.

That’s a really big gamble. Any number of unanticipated changes might happen in 30 years: Your job or your partner’s job may force you to move, your parents may have medical problems that need greater care, or you may decide to change careers or start your own business. This unavoidable uncertainty means it’s not in your best interest to plan for a future that’s so far away.

Look for a house that suits your immediate needs and understand that every place is adaptable to a degree. A den or an office can become a nursery, a shed can become a workshop, and a basement storage area can become another bedroom. Don’t think you need to plan your life out forever if you choose to buy a home. Make some reasonable, educated guesses about what your life will be like for the next 10 years or so, and buy the house you need for that time.

Don’t become “house poor”

Many first-time home buyers also fall into the trap of figuring out the most that they could afford to spend on a new home, then spending exactly that amount. The reasoning behind this decision is simple: money spent to repay a mortgage isn’t really “spent.” Homes can be refinanced or remortgaged if money gets tight, or repaid when the house is sold. That’s sound reasoning, but only to a point. People who end up spending most of their monthly income on a house payment leave little for other debt repayment, retirement savings or building an emergency fund. They find themselves unprepared for an unexpected medical bill or car repair. They also find it difficult to take vacations or make home improvements. That’s an unenviable position.

Avoid this trap with a little financial consultation. Understand that your upper limit for housing expenses should only be a worst-case scenario. Buy the house you need, not the most expensive house you can afford. You’ll be happier in your home and in your budget.

Understand the process

There are a lot of factors that go into obtaining a mortgage. First, you and the seller have to agree on a final price, which includes the money you pay for the house and a host of fees, like the inspection, appraisal and title transfer. The realtor in charge of selling the home can walk you and the seller through the process.

Next, you’ll need to arrange financing. You’ll want to shop around for the best prices, but new regulations can make that costly and time-consuming. Each financier has to appraise the value of the home, and then compare their estimate to the price you agreed on with the seller. The greater the difference between these two values, the more expensive your home loan will be, but that’s not the only factor. The financing institution also has to check your credit, verify your income and assets, and confirm your employment to follow new regulations passed after the last financial crisis that was largely fueled by bad mortgages.

These regulations can make it more difficult just to get the home loan, much less one at a good rate. This is particularly true if your employment history is short or if you’re just getting started with a new business.

You can help this process by buying a house you can afford, building your credit score by reducing the amount of credit you’re using, staying with the same employer and saving for a significant down payment. You should aim to have at least 20% of the total amount of the sale for a down payment, as this is the threshold to avoid having to pay for private mortgage insurance (PMI). A larger down payment also reduces the risk of the loan to the lender and can help get you a less expensive mortgage. This, in turn, makes for a less expensive housing payment. You can also ask for help from a parent or family member; a cosigner on a mortgage may improve your credit score and lower your interest rates.

Don’t do it alone

With an overwhelming amount of mortgage lenders to choose from with different rates, terms, and fees, making a choice of who to apply with can be challenging. Given the difficulty of shopping around, make your first stop the institution that has the best chance of giving you the best rates from the start. Your credit union (ahem) is there to help your community, and that includes helping new home-buyers secure loans for the first time. Make a smart call by speaking to a credit union representative about mortgage rates. When you’re ready to get out of the basement or that one bedroom apartment, your first stop should be Listerhill.

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Frequently Asked Questions

  • How do I connect my additional Listerhill account(s) in Online Banking?

    In order to add an additional Listerhill account in Online Banking, please:

    1. Log in to Online Banking through our website.
    2. Click the Accounts tab at the top.
    3. Click “Connect An Account”
    4. To add a Listerhill Account, click “Listerhill Credit Union Account”.
    5. Enter the appropriate information on this screen and select the appropriate account type.
      1. Account Number.
      2. Nickname the Account.
      3. Select the Account Type.
        1. Share Draft – Checking
        2. Share – Savings
        3. Share Certificate – CD
        4. IRA
        5. Line of Credit
        6. Loan
        7. Credit Card
      4. Check the box for Bill Pay if desired.

    Once finished, the new account will be added by the next business day.

  • How do I connect my credit card(s) in Online Banking?

    In order to add a new credit card in Online Banking, please:

    1. Log in to Online Banking through our website.
    2. Click the Accounts tab at the top.
    3. Click “Connect An Account”
    4. To add a credit card, click “Listerhill Credit Union Account”.
    5. Enter the appropriate information on the screen and select the appropriate account type.
      1. Account Number.
      2. Nickname the Account.
      3. Select the Account Type.
        1. Share Draft – Checking
        2. Share – Savings
        3. Share Certificate – CD
        4. IRA
        5. Line of Credit
        6. Loan
        7. Credit Card
      4. Check the Box for Bill Pay if desired.

    Once finished, the new card will be added by the next business day.

  • What if I had merchandise points?

    Cashbackmall will be available for redemption on 9/1/22 for cards converting to cash back rewards from merchandise points.

  • Who is eligible for Cash Back Rewards?

    Cash Back Rewards are available for Listerhill Signature Credit Cards. Signature credit cards require a limit of $5,000 or greater.

  • How much do I get back in Cash Rewards?

    Cash Back Rewards are calculated at 2% on purchases. Cash Advances and Balance Transfers do not earn Cash Back Rewards.