Congratulations on deciding to buy your first home! This is an exciting time for you and your family, and our team at Community First National Bank want you should enjoy every minute of it.
As a local Missouri bank, we understand the significance of purchasing your first home. Community First National Bank is here to help guide you and stand with you for the moments that matter. Our lenders can help you by answering all of your questions about the buying process — from deciding on a budget all the way to closing the deal.
Don’t know where to begin? Give us a call at (573) 234-4120 to speak with one of our Lenders today!
Saving and Spending
Most homeowners don’t purchase their first home with a briefcase full of cash so you’ll most likely need to get approved for a mortgage. Unless you’re a veteran and qualify for a zero-down VA loan, most lenders will require you to put down a minimum of 3%.
Saving for a down payment is the main factor in buying your first home and our team is here to help you examine your spending and find new ways to save.
It takes time, research, and preparation to buy a home — but the more you save to put down, the better your terms will be when you take out a mortgage.
Your ability to get a mortgage and the terms of the loan will also depend heavily on your credit score and amount of available credit. Your credit score is a three-digit number based on how much you’ve borrowed in the past and how responsible you’ve been in terms of paying your bills. For example, regularly making late payments can negatively affect your credit score.
Lenders will also look at how much of your available credit you use. People who consistently max out their credit cards are a riskier investment, so it’s recommended to use less than 30% of your available credit on your credit cards if you want to be approved for the most money possible for your loan.
Community First National Bank’s mortgage lenders can help you determine whether you meet the qualifications. Either way, though, you’ll need to determine how much of your income you can afford to budget for paying your mortgage.
What Are My Loan Options?
If you’re interested in buying a home but don’t have the financial credentials to qualify for a loan, don’t panic — you still have a few options.
In the meantime, the most important thing you can do is improve your credit score. Getting into the habit of making payments on time is vital, and this simple practice will have a tremendous impact on your score.
You’ll also want to take steps to reduce your outstanding credit card balances relative to your credit limit. For example, if you have three credit cards with limits of $3,000, $4,000, and $5,000, your total credit limit is $12,000.
That doesn’t mean you should use that entire limit, though. For an ideal score, you’ll want to stay below a 30% utilization rate for each individual card.
Another practice that could help your score is paying off your balances twice a month instead of once; in addition to ensuring you never miss a payment, you’ll also further limit the amount of credit that you use.
Fixed-Rate Mortgage Loans
If you plan on staying in your home for several years and like the stability of a fixed interest rate, our Fixed-Rate Mortgage may be right for you. Fixed-rate mortgage loans have the same interest rate for the entire repayment term. Because of this, the size of your monthly payment will stay the same, month after month, and year after year. It will never change.
Adjustable Rate Mortgage Loans
If you plan to stay in your home over a shorter period of time or expect your income to rise in a few years, our Adjustable-Rate Mortgage may be right for you. Typically, the rate on an ARM will change every year after an initial period of remaining fixed. It is therefore referred to as a “hybrid” product. A hybrid ARM loan is one that starts off with a fixed or unchanging interest rate, before switching over to an adjustable rate.
FHA & VA Loans
Depending on your situation, you might qualify for a VA loan or an FHA loan. FHA loans are insured by the Federal Housing Administration and feature lower down payment requirements designed to make purchasing a home feasible for more people.
VA loans are only available to military service members and their families. Similar to the FHA program, these types of mortgages are guaranteed by the federal government. This means the VA will reimburse the lender for any losses that may result from borrower default. The primary advantage of VA loans is that borrowers can receive 100% financing for the purchase of their home. That means no down payment for our brave men and women whatsoever!
Need a short term Construction loan to cover the costs while constructing a home? We can help! We also provide loans that fund the purchase, development costs and interim financing of residential developments. Interest is only paid on the amount of money that is drawn. When the home is completed, the loan would convert to a Conventional or Non-conventional mortgage loan. (You must qualify for a Conventional or Non-conventional mortgage loan.)
What To Expect When Buying Your First Home
Buying your first home can feel like a daunting task because buying property is one of the largest investments you’ll ever make. Committing your savings and signing up for a mortgage might be the largest and longest financial obligation you’ll ever have. If you’re feeling overwhelmed, start by learning the basics of what to look for and what to avoid.
- Determine how much you can afford. The first step is determining a budget for your new home. Calculate how much home with our Real Estate Loan Calculator to see how much home you can afford. Once you have saved enough, work with our lenders to get pre-approved for a mortgage loan that works for your lifestyle.
- Shop for the right type of loan. When you meet with one of our Community First lenders, you’ll be asked a series of questions about your expectations and desires for a new home. Certain loans are better for first-time home buyers who need to keep cash in their pockets. Depending on your situation, you may look for loans with smaller down payments, lower interest rates, or lower monthly payments. Be sure to ask about FHA loans or VA loans if you or your spouse is a member of the armed forces, which requires a 0% down payment in most instances.
- Make a “Home Wish List”. Develop a list of your priorities for a new home. Consider variables such as home condition, repairs, renovations, amenities, location, schools, traffic, shopping, and HOAs. How far are you willing to commute to work? Do you want to live within the boundaries of certain Missouri school districts? Are you looking to renovate or do you need a move-in ready home? Make your Wish List before you start attending open houses to avoid homes that won’t meet your needs.
- Find a real estate agent. Once your list is in place, it’s now time to find a trusted real estate agency that will make this process easier for you. Ask your friends or family for references, or ask one of our lenders and we’ll set you up with a trusted agent. Your agent will help you wade through a pile of listings on the market, research them on MLS, and qualify homes based on your “Wish List.” Real estate agents are a great investment because they can help speed up the buying process and get you into your new homes quickly and efficiently.
- Make them an offer they can’t refuse. This is where having a savvy real estate agent really matters! Your agency will help you make the best offer possible on your home, negotiate on your behalf, and handle the back and forth between both parties. This can be incredibly time-consuming and your negotiations may take time, so be prepared to negotiate and be patient.
- Close the deal & enjoy your first home. Once both parties agree to the terms of the sale, you can begin the closing process. You will finalize your loan with your lender, prepare your tax and title documents for a final meeting, and dream about the first night in your new home. On closing day, you’ll sign your paperwork and officially become a homeowner.
Want to move out of your apartment or parent’s basement but don’t know where to start? Use our handy Home Buyer Checklist and get on the path to becoming a homeowner!
Community First National Bank’s First Time Home Buyer Checklist
- Pay off all existing debt
- Determine how much home you can afford
- Save a down payment
- Save for closing costs
- Get preapproved for a loan
- Find a home for sale & stay on budget
- Research the neighborhood
- Attend open houses
- Make a competitive offer!
- Prepare for closing & have a backup plan