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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

For a limited time, get no PMI* in addition to low rates and local service for your home loan with only 3% down. Learn more here. 

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Frequently Asked Questions

  • How do I redeem my Merchandise Rewards?

    The easiest way to redeem your Merchandise Rewards is to log into Listerhill’s Online Banking and click the “Get Info” link to the right of your credit card information. This will take you to our credit card servicing site within the same window. Select “Rewards” on the upper right side within the screen (below FICO Score) and on the next screen, click on the CURewards logo. This will automatically sign you in to be able to redeem your Merchandise Rewards points!

  • What are the benefits of becoming a SEG partner organization?

    1. Completely free program and zero liability to your company.

    2. Easy to implement – requires no additional staffing or resource allocation.

    3. Builds employee loyalty and helps your organization stand out in a competitive employment market.

    4. Encourages financially stable employees through free on-site financial workshops.

    5. Initial on-site employee orientation; re-orientations and free financial seminars available. Once signed up, our SEG partner organizations are offered a free 30-40 minute on-site orientation to educate employees about the benefits of belonging to the Listerhill Credit Union financial cooperative. This informative and helpful session gives your employees a chance to ask questions and learn about the many benefits, products and services that membership provides them. Once on board, we also offer [INSERT PROGRAM NAME HERE] partner organizations free Lunch n’ Learn seminars for employees. Topics include creating a budget, paying for college, debt management and how to buy a home.

    6. Credit union support at benefit fairs and open enrollment.

    7. Same-day account opening – we can immediately assist your employees who would like to open an account during our visit.

    8. Free informational materials – We provide all materials at no charge, including brochures and financial wellness educational workbooks

    9. Free participation in employee benefits fairs, new employee orientation meetings and other organizational events.

    10. No hassle partnership – we do all the work!

  • How do your employees benefit from being a SEG?

    1. Lifetime credit union membership

    2. Competitive rates on a wide range of savings products like:

    • Share Savings
    • Money Market
    • Certificates
    • IRAs
    • My Goal Savings
    • Explorer Rewards

    3. A wide range of loan products like:

    • Auto loans
    • Personal loans
    • Recreational loans

    4. Competitive loan and savings rates.

    5. 24/7 account access with Smart ATMs, Online and Mobile Banking, or by telephone with Automated Access. The choice is yours.

    6. eStatements

    7. Overdraft protection

    8. Up to 3 overdraft refunds per year on us.

    9. First box of checks free when you open your new checking account.

    10. Free Visa debit card with rewards or a UNA Keystone Debit Card to show your #lionpride and give back to the University.

    11. Checking accounts with no minimum balance required.

    12. Interest-earning checking accounts

    13. Free Online Banking with features like:

    • Free Online Bill Pay
    • PopMoney
    • Notify Me Alerts
    • Personal Finance Manager

    14. 24/7 Access to Smart ATMS with features like:

    • Make a deposit
    • Get exact change
    • Make loan payments
    • Speak with a real, local representative

    15. Access to 5,000 CO-OP Shared Branches nationwide for easy access to your money wherever you go.

    16. Visa Platinum Cash Back card with 1% cash back on everything you buy.

    17. Visa Platinum Merchandise Rewards

    18. A full-service mortgage lending department and your mortgage stays with Listerhill for the life of the loan.

    19. A full-service financial planning department that gives you personalized, local service.

    20. Access to financial wellness education courses and information.

  • How does the Maintenance Fee contribute to Listerhill's sustainability?

    In the past, we charged a $10 Relationship Fee to help cover the cost of servicing members' accounts. We felt we could serve you better by removing this fee and establishing a lower fee based on your investment in the cooperative. Encouraging our members to save and borrow with us is key to Listerhill's sustainability, plus it creates value that it ultimately returned back to our member owners (like you!)

  • How can I avoid the new Maintenance Fee?

    You can avoid the new $5 Maintenance Fee entirely when you meet just one of the following requirements:

    • You or someone in your household has had a current loan or mortgage within the last 12 months.   

    • You or someone in your household has an open credit card    

    • You or someone in your household has an aggregate average daily balance of $1,000 in your accounts  

    • You or someone in your household has a relationship with our Listerhill Financial Services department   

    • You have paid at least $125 in NSF, Transfer, or Courtesy Pay fees for the month   

    • You are under the age of 25   

    • Your account is less than 90 days old   

    • You have paid a Return Mail Fee or an Inactive Account Fee for the month