Getting Your Feet in The Door

Homeownership can be a dream come true.

Crossing the threshold for the first time and knowing it’s yours! Arranging and rearranging the furniture, hanging pictures (with nails!), grilling in the backyard, or whatever the comfort of home means to you.

Buying a home is an exciting milestone filled with big decisions. While the process can sometimes feel overwhelming, the good news is that today’s market offers plenty of tools and resources to make your journey smoother. With options like virtual home tours and online consultations, finding and financing your dream home has never been more convenient. Plus, mortgage rates remain competitive, making it a great time to explore your options. With careful planning, patience, and flexibility, you can confidently navigate the home-buying process and secure the right loan to fit your needs.

Here are a few essential home-financing tips:

Put aside money for a down payment.

Most lenders require some down payment, which can reduce monthly expenses and make it easier to secure a loan. With a down payment of 20% or more, you can avoid paying Private Mortgage Insurance (PMI).

Clean up your credit.

A good credit score is crucial to getting the best financing. A credit score of 700 or higher is ideal, especially in today’s economy.

Unison Credit Union members can sign up for SavvyMoney^®, a real-time credit monitoring tool through online banking using the mobile app! You can get your report for free online at AnnualCreditReport.com if you're not a member. Check your report for errors, dispute any mistakes, and lower your debt if possible, especially with revolving credit like lines of credit or credit cards. Also, delay applying for any new credit during this time to avoid lowering your credit score.

Look at your budget.

Estimate what you can realistically afford each month, including your mortgage payment, interest, insurance, and property taxes. If your down payment is less than 20% of your home's value, also add the estimated monthly cost of Private Mortgage Insurance (PMI).

Financial experts, including Unison’s Member Advisors, suggest that you allocate no more than 25 percent of your monthly budget toward housing. According to a 2019 Consumer Reports article, one-third of homebuyers reported that they spent more than they expected when purchasing a home. While no one can predict the future, factoring in home maintenance costs along with your payments and allowing for other living and emergency expenses in your overall budget will benefit you in the long run.

Types of mortgages.

Choosing the right mortgage depends on your situation and what you can afford. There are basically two types of mortgages, and terms can vary depending on your financial institution:

Fixed Rate Mortgage – Fixed monthly payments for the length of the loan can make it easier to budget, especially if you plan to stay in your home for a longer time. While loan terms vary per financial institution, at Unison, we offer both 15-year and 30-year fixed-rate mortgages
Adjustable Rate Mortgage (ARM) – With a lower initial interest rate, an adjustable-rate mortgage may be attractive if you’re planning to move or refinance in a short amount of time. Unison offers 3-year, 5-year and 7-year ARMs

Get preapproved.

Getting preapproved for your mortgage is one of the most important steps to getting a mortgage. While a preapproval letter isn't a mortgage guarantee, it gives you a ballpark of how much house you can afford. It also lets the seller know that you are a serious buyer and may even give you an edge if you compete with another buyer who isn't preapproved. The pre-approval process is similar to applying for a mortgage, and if you go with the same lender that preapproved you, it can save you a few steps and valuable time when applying for the actual mortgage.

Getting on the path to homeownership may be easier than you think, and at Unison Credit Union, we're here to help you get your feet in the door. Whether you want to know more or are ready to get started on your mortgage application, our Unison Member Advisors are happy to answer your questions and help you determine which type and length of mortgage may work best for you.