By April Gleason – Vice President of Lending
Here in Maine, we enjoy one of the highest rates of homeownership in the country at over 71 percent as of 2017, according to the U.S. Census Bureau. This isn’t surprising considering Maine’s rental market is among the least affordable in the nation, according to a 2018 study from the National Low-Income Housing Coalition.
Mainers understand that home ownership is not only an important step in achieving financial security but is an opportunity to lay roots here that will last for generations. Nonetheless, the process of buying your first home can be a mystery to anyone who hasn’t gone through it before. After all, buying a home is likely the most significant purchase a person makes in their lifetime.
First-time homebuyer education courses are one of the best ways to clear up the mystery around homeownership and prepare financially and emotionally for the homebuying process. Maine hoMEworks, a nonprofit group of homeownership professionals founded in 1998, partners with community service providers across Maine to offer low cost homebuyer education courses.
Here’s a few tips to keep in mind as you embark on your journey toward homeownership:
- Take time to prepare. Deciding to buy your first home is an exciting experience, but it’s also one of the biggest financial decisions you will ever make. Take the time to prepare yourself financially and emotionally for all the unexpected obstacles in the homebuying process. Most importantly, do not be afraid to admit to yourself that you aren’t ready if you’re feeling overwhelmed.
- Have realistic expectations. When you buy a house, you are transferring the title of real estate from the current owners to you. Beyond just the purchase price of the home, these transactions are expensive when you factor in inspections, closing costs, legal fees, insurance, etc. The ideal mortgage lender is the one who speaks frankly and who sets realistic expectations about what you can afford from the get-go.
- Shop around! Regardless of the recommendations from family, friends, and others involved in the real estate transaction, it’s always a good idea to shop around. Even if you’re looking to use a government loan program such as FHA or USDA Rural Development, the closing costs and approval process will vary between lenders,, take the time to research and compare which lenders in the area do offer these programs and other first time homebuyer programs you may not be aware of. You might be surprised to learn what’s offered at your local credit union.
- Value local servicing. During the mortgage process, homebuyers can get so focused on finding a willing lender that they overlook what happens to their mortgage after closing. In some cases, homeowners can find themselves with mortgages serviced by a third-party or sold to an out-of-state lender. With a local servicer, borrowers retain a sense of ownership over their mortgage as well as local access to their lender throughout the life of the loan. Ask your lender what will happen to your loan after closing.
- Credit history matters. You might think that your lifelong avoidance of credit means you are a prime candidate for a mortgage. A lack of credit history is actually one of the most common unexpected roadblocks for first-time homebuyers. Credit matters greatly in lending decisions, and for those with less-than-stellar credit histories, rates and fees can quickly get out of control. Before shopping for your dream house, educate yourself on the mechanics of credit scores, the difference between soft and hard inquiries, and smart strategies for building credit. Also, federal law gives consumers free access to their credit reports once every twelve months at www.annualcreditreport.com.
- Remember: you are in control. Despite what it may seem during the homebuying process, especially when unexpected issues arise during negotiations, inspections, loan approval, etc., the consumer is in total control of the transaction. You are your number one advocate; if you don’t understand something, do not be afraid to ask! Nobody is an expert the first time around. Keep a level head, educate yourself, and you’ll be in your dream home in no time.
April Gleason is Vice President of Lending for University Credit Union and a board member of the Maine Association of Mortgage Professionals. A strong believer in the power of financial education, Gleason shares her knowledge with first-time homebuyers as a presenter and board chair for the nonprofit hoMEworks. She may be reached at email@example.com.