Tips for First-Time Homebuyers

Whether you're building, buying, or refinancing a home, the process can be confusing. Particularly for you first-timers out there, there’s a double whammy at play: on one hand, it can be very overwhelming because you likely have a ton of questions and are dealing with loans and mortgage applications and an investment of this size for the very first time. On the other hand, it's also incredibly exciting and emotionally-charged ... which means it's that much more frustrating and anxiety-inducing.

With that in mind, we want to do what we can to give anyone going through the process of buying a home for the first time a little peace of mind. Here are some insider tips:

1. Making sense of what you really want: If it's been six months and you still haven't found a house worth buying, it may be a classic case of "It's not you, it's me." Chances are, you haven't found something because on some level, you might not be ready. Motivated buyers tend to find what they're looking for sooner rather than later. We're talking weeks, maybe a few months ... not a year. Either you're an incredibly picky person, you have a pretty terrible real estate agent, or there's a fundamental flaw with your process. The flaw could be that you're just looking too soon ... or it could mean you're being unrealistic about what you can afford. Go to dinner with some friends. Relax for a weekend. And then ask yourself if you're ready to make this kind of financial commitment. If the answer's "yes" ... read on!
2. Making sense of your money: Do you have a lot of debt? Multiple maxed out credit cards? Have you been late with some of your payments over the past year? If so, you need to get that debt in order before you start adding to it in a major way. Interest rates on credit cards can be much higher than the interest rates on a mortgage ... so if you think you'll be spending smarter by putting more money down on a house when you have several thousand dollars in debt on your credit cards, you might just be making a big mistake. Pay off the short-term debt. Bonus: less credit card debt means you'll likely qualify for a bigger loan for the house.
3. Making sense of mortgage rates: Mortgages are long-term investments; they're governed by external factors like inflation and the economy in general, and because of that rates can change quite a bit from month to month. When you're looking at mortgage options, you'll come across a variety of options, including the decision to go with fixed or adjustable rate mortgages (ARMs). Fixed rates are locked-in, while ARMs adjust over the life of the mortgage.
   
   If you're a first-time buyer and you want to know what you're getting into, and you want to be able to plan payments ahead of time, a fixed rate mortgage might feel like a good fit at first glance. But when you get down to it, ARMs might be the more realistic, better fit in the long-term. ARMs don’t typically vary month to month; instead they will "re-price" occasionally depending on the term of the mortgage. Many are set up as a hybrid of sorts, with a fixed rate for a specific number of years, and then a reset date where the mortgage rate "floats" for the remainder of the term. For example, a 5/1 ARM will re-price annually after the first five years, whereas a 10/1 ARM will re-price annually after the first ten. What's particularly appealing for first-time buyers is that these types of ARMs generally permit you to lower your initial payments, so they can be more accommodating to the fact that you may just be getting started in your career and family. When evaluating your ARM options, keep in mind the industry average for the life of a mortgage is seven years, so a 15/1 or 10/1 ARM can be a good bet. Divorce, moving, and other substantial life-changing events tend to occur in cycles about every seven years.

All of this advice really comes down to making sure you talk to a qualified mortgage professional and are honest with him or her. Don't impulse-buy when it comes to something as expensive as a house, and don't fall for any too-good-to-be-true offers just because they claim pre-approval. Think about what you can afford now, and how your life may change in the future. The bottom line is, be realistic about your situation, your goals and your expectations, and it will pay off.

Everything you ever wanted to know about banking, but were afraid to ask

If we walked down a crowded street and asked random people how they feel about their bank, we would get a very wide variety of responses. Some might even be unprintable. But most people would be able to speak pretty freely about how they feel – they’d praise the customer service or complain about fees. They’d share stories about how a specific piece of advice or a much-needed loan saved them in a bind. Some would crack jokes about the lack of funds in their account. But the bottom line is if you ask people to tell you how they feel about their bank, most don’t have trouble tapping into their emotions and sharing.

What if we kept asking questions, though? What if we asked those same people how they feel about their retirement plans, loans for small businesses, mortgage applications, or interest rates on their savings accounts? The conversation would likely take a turn. Sure, some people are very knowledgeable about all these topics, maybe even passionate. But many would also shrug their shoulders. They’d admit a bit of confusion and maybe even chuckle, explaining how they wish they knew enough about these topics to make themselves a little more money. And that’s where we (and really, this blog) comes in.

We know fine print can be frustrating. Understanding interest rates, percentages, contract clauses and loan agreements can be overwhelming. But our goal is to help you take charge of your finances and help you help yourself. We get that you’re real people, and that’s just how we intend to treat you. So we hope you’ll keep reading this blog, because we’ll take the time to give you the inside scoop on how your bank can work for you, and help you make sense of all the topics we mentioned, and more.