First-Time Home Buying Mistakes To Avoid

homebuying mistakes

The mistake: Using the same agent as the seller

How to avoid it: You may be told that you can save money by using one real estate agent for the transaction. However, the reality is that you are much better served by having someone looking out for ONLY your best interests.

The mistake: Buying points without considering how long you will stay in the home

How to avoid it: When you buy points on a mortgage, you lower the interest rate on the loan by providing more money up-front. This certainly makes sense if you are planning on staying in the property long-term and will save a large amount of money by paying less interest over that time frame. However, if you plan on moving within a few years or are buying the home with the idea of selling it relatively quickly, it probably doesn’t make much sense to buy points.

The mistake: Using an adjustable rate mortgage to buy before you are ready

How to avoid it: One of the reasons for the housing crisis of the late 00’s and early 10’s was homebuyers being encouraged to buy homes they couldn’t afford using a low initial interest rate that they could theoretically renegotiate as the value of the home increased. The problem came when many of those homes didn’t increase in value. Gambling that you will be able to refinance a mortgage or sell the home before the rate increases is not only risky, but puts you in a very stressful position as a homeowner.

The mistake: Including closing costs in the loan

How to avoid it: The lender may provide you the option of including the closing costs in the mortgage loan if you are not able to meet this expense at the time of closing. However, financing these costs means paying more since you will have to pay interest too. You are better off saving up for closing costs ahead of time since this will cost you much less in the long-run.

The mistake: Being unaware of service contracts for your home

How to avoid it: Hot water heater broken? Before you shell out the cash to have it fixed, check the paperwork to see if repairs are covered in a service contact included in the loan agreement. You don’t want to pay out of pocket for something that is already covered.

The mistake: Thinking a passing home inspection grade means no worries

How to avoid it: The best home inspectors will give you notes on possible future trouble areas even if they are working fine right now. However, this isn’t always the case. Don’t assume that a home inspector signing off on a property means that there won’t be any major expenses in the near future. Assuming that repair costs will spring up eventually and preparing accordingly is the best practice.

The mistake: Not budgeting for HOA fees

How to avoid it: With all the costs popping up as you move through the buying process, it can be easy to forget about Homeowners Association Fee. Unless you have money to burn, a successful home buying experience is going to involve understanding first what you can afford and then the total monthly cost of the property you are looking at—including potential increases.

The mistake: Failing to plan for potential increases in insurance or property taxes

How to avoid it: With a fixed-rate mortgage, you might think your mortgage expenses are locked-in. But think for a moment of parts of the country hit by natural disasters in the past few years. Many homeowners in these areas have seen dramatic increases in their homeowners insurance as a result. Hopefully you won’t be hit by any cataclysms, but even if the odds of this are low, it’s still wise to have some money set aside in a housing fund to cover increased costs.

© 2014 BALANCE

Questions to Ask About Property Tax Before You Buy

Property-TaxWhen selecting a home to buy, you’ve got a lot on your mind: how the different options meet your wants and needs; the respective price tags; what the individual neighborhoods are like; and the likelihood each property will go up in value. While all these are important factors, they need to be considered in conjunction with an oft-overlooked issue: the property tax.

Whether you are a first time homebuyer or an old pro, you are well-advised to contact the local property tax appraiser’s office for each of the homes you are considering. Many of these offices have websites to answer your questions, but be aware that you may need to call some appraisers’ offices to get the information you need. When you have gotten in touch, there are some key bits of information you need to find out to truly make an informed decision. Below are the questions every homebuyer should ask about property taxes.

  • What is the assessed value of the home?
  • What is the formula used to calculate property taxes?
  • Are there supplemental taxes in the first year of ownership?
  • Do rates go up after the first year?
  • Will the home be reassessed after closing?
  • When was the home last assessed?
  • When is the next scheduled reassessment?
  • Are there exemptions to—or assistance for—property taxes?
  • Will remodeling the home cause a reassessment?
  • Does the home fall under the jurisdiction of multiple tax authorities?
  • How do taxes on the home compare to other properties in the area?
  • Is it possible to appeal the property taxes?

You may not be able to nail down the exact number for every year going forward, but by asking the above questions and recording the answers, you should be able to get a sense for what kind of property tax profile each housing option presents.

 

© 2014 BALANCE

Understanding Mortgages

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If you’re going to be responsible for paying a mortgage for the next 30 years, you should know exactly what a mortgage is. A mortgage has three basic parts: a down payment, monthly payments and fees. The down payment is the amount you contribute toward the home purchase. The monthly payment is the amount needed to pay off remaining amount over the length of the loan and includes a payment on the principal of the loan as well as interest. The fees are all the costs you have to pay up front to get the loan.

Keeping in mind those basic concepts, we’ll look at some of the mortgage variations that are available:

  • Fixed Rate A fixed rate mortgage requires a monthly payment that is the same amount throughout the term of the loan. When you sign the loan papers you agree on an interest rate and that rate never changes. This is the best type of loan if interest rates are low when you get a mortgage.
  • Adjustable Rate Be careful if you’re considering taking an adjustable rate mortgage. An adjustable rate mortgage allows the interest rate on your loan to vary with prevailing interest rates. If rates go up, so will your mortgage rate and monthly payment. If rates increase a lot, you could be in big trouble. If rates go down, your mortgage rate will drop and so will your monthly payment. A good strategy may be to stick with a fixed rate loan to safeguard against rising interest rates. And if rates drop, refinance your mortgage to take advantage of lower rates.
  • Veterans Administration (VA) Loans The Veterans Administration offers loan benefits to veterans who served in the armed forces on active duty during times of conflict, such as Korea, Vietnam, Desert Storm and Afghanistan, as long as they were not discharged dishonorably. The first step to obtain a VA loan is to obtain a certificate of eligibility, then submit it with your most recent discharge or separation papers to a VA eligibility center.
  • Federal Housing Administration (FHA) Loans The FHA was created to aid people in obtaining affordable housing. FHA loans are actually made by a lending institution, such as a bank, but the federal government insures the loan. This is often the least expensive loan that non-veterans can get.
  • Customized Loans Whatever the situation, there’s a financing strategy with terms to fit your budget. These options include the First-Time Home Buyer Program, as well as High Loan-to-Value, No PMI and Reverse Mortgages. 

Visit NASA Federal’s Mortgage Center to learn more, or to apply today!

©Copyright Visa

To Own or Not to Own. That Is the Question.

buying-a-home1Turtles and snails are born with their homes on their backs. You, however, are not so lucky. Unless you plan to live in a cardboard box or you can talk someone into allowing you to live with them for the rest of your life, you will probably need to either buy or rent housing.

Home ownership isn’t for everyone. It’s definitely a long-term commitment. The prices of homes increase over the years, but usually at a slow rate. With all the financing, closing costs and other expenses associated with owning a home, you’ll probably lose money if you sell in less than five years.

You also have to think about the upkeep of a home. Everything from cutting the grass to putting on a new roof is your responsibility. The costs can really add up. Then add taxes, water and sewer bills and other expenses and you can get into some sizable payments.

But when you take full financial and maintenance responsibility for a home, it’s yours to do with as you please. Paint the walls purple. Add a planetarium. Put in a fireman’s pole. You’re in charge.

There are also substantial financial advantages to owning a home. The part of your monthly payment that goes toward the principal is all equity and the part that goes toward interest is tax deductible. Compare that with paying rent, which is neither an investment nor a tax write-off.

As your equity increases with time (and payments) it will be a source of financial stability for you, giving you collateral for a loan or producing a large sum of money if you sell. And if you decide to sell your home, as long as you have lived in it for two out of the past five years, you won’t have to pay tax on gains of up to $250,000. The limit doubles to $500,000 if you’re married, filing jointly, and both have lived in the home for two years.

©Copyright Visa

Ten Ways to Avoid Home Improvement Budget Killers

House Made of Tools

1. Don’t add “while we’re at it” jobs that weren’t a part of the original budget/plan.

2. Stay away from cheap materials or corner-cutting measures that will just mean paying more later.

3. If you are doing the work yourself, learn the entire process before you start instead of using a “learn as you go” approach.

4. Let your contractor know you aren’t interested in the top-end, luxury versions of goods and materials.

5. Check service ratings websites before hiring your contractor.

6. If you are doing some pre-home sale upgrades, give yourself plenty of time so you don’t have to pay for rush work or overtime.

7. Consider refurbishing certain items instead of tearing them out and replacing them.

8. Exercise your creative abilities and look for ways to use materials found at architectural salvage stores.

9. To avoid paying to store in a locker any work-blocking household items, have a plan ahead of time for housing in-the-way furniture during the project.

10. Ask your contractor–you don’t want to miss out on potential savings because you failed to communicate.

©Copyright Balance

Looking to Lower an Existing Mortgage Payment?

Mortgage Payment

Mortgage Rates are at Historic Lows

Look no further than NASA FCU. Whether you’re seeking the security of a fixed rate loan or prefer the affordability of an adjustable rate loan, NASA FCU’s got you covered. We have home financing solutions to meet a wide variety of needs, including a 95% loan-to-value refinance* program, FHA and VA mortgages, and jumbo loans. Plus, you’ll receive the friendly, reliable service you’ve come to expect from your Credit Union.

So when it’s time to refinance, look no further than NASA FCU! Lower your mortgage payment today.

*Special loan programs offered to well-qualified applicants. Some restrictions may apply. Offers valid for primary residences only. Speak with a NASA FCU First Mortgage Loan Specialist for loan details and rates. We do business in accordance with the Federal Fair Housing Law and the Equal Credit Opportunity Act.

Nobody closes it faster than NASA FCU!

Even in these extraordinarily high volume times, NASA FCU members are experiencing mortgage approvals in half the time, as opposed to the 120-day average turnaround typical in the mortgage market today. We haven’t missed a reasonable closing