Buying vs. Renting
Home ownership isn't for everyone. It's a long-term commitment. Home values should increase over time, but usually at a slow rate. With all the financing, closing costs and other expenses associated with purchasing a home, if you don't plan to stay in an area long, you could end up losing money if you sell. It may be in your best interest to rent if you need the flexibility of a short-term contract.
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. On the other hand, when you take full financial and maintenance responsibility for a home, it's yours to do with what you like.
There are also several 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 could be tax deductible1. Compare that with paying rent, which is neither an investment nor a tax advantage.
Still not sure if you are ready to buy a home? Compare the costs of renting vs. buying.
1. Consult your tax advisor.
If you think owning a home is for you, start planning for it now. You need to get your finances in order, save for a down payment and prepare for the responsibility of owning a home.
Calculate How Much You Can Afford
How much you can afford is very different from how much you can borrow. Think about your monthly budget and how much you would be able to comfortably spend each month without putting a strain on your personal finances. Don't start shopping for your dream home until you know what your preferred monthly payment would be. Remember, being a home owner doesn't stop with your monthly payment. You need to account for utilities, insurance, upkeep and other costs.
Save for a Down Payment
How much do you need to save for a down payment? That depends on a lot of variables. No matter how much you need for a down payment, save more. There are a lot of fees included with buying a house and you'll be in much better financial shape when you move in if you've given yourself a little extra.
Negotiating for a house is a lot easier when you have a pre-approval letter in your back pocket. Based on your financial strength, a lender may give you a pre-approval on a loan for a certain amount even though you haven't yet identified a specific property.
You can shop around for houses while knowing with confidence that if you find one within the amount of your pre-approval, you will get financing if you decide to buy it. And when it comes time for negotiations, you're in a much better position because the seller knows you can get the financing.
What to Expect
Unsure what to expect when you apply for a mortgage? First Citizens will walk you through every step of the process.
What You Need to Apply
In order to make applying for a mortgage a quick and easy process, there are pieces of information and documents that you should begin gathering ahead of time. For specifics, see our mortgage application checklist.
What Happens After You Apply
Once we have received your application, you will be contacted by one of our Mortgage Bankers to discuss loan options and the interest rate that is available to you. They will collect any additional documentation that is needed, along with appraisal and credit report fees if you wish to proceed. Once all documents and information have been received, your application will be reviewed and the credit decision will be made.
This is also the time where you should schedule a separate home inspection. The home inspection is one of the most important parts of the home buying process and should not be skipped. Most sales contracts will include a home inspection contingency in case any major problems are discovered.
If approved, a closing will be scheduled. And just to make sure there are no surprises at closing, your Mortgage Banker should contact you several days prior to your scheduled closing to review all final details such as fees, total loan amount and the date of your first payment.
Closing on a Home
The closing will take place at the office of either a title company or an attorney in your area who will act as our agent. You will be reviewing and signing several loan papers during the closing and the closing agent or attorney conducting it should be able to answer any questions you may have. You can also contact your Mortgage Banker if you prefer.
Normal credit approval applies.
Here are a few things to keep in mind as you begin to look for and purchase your first home.
- Start by reviewing your budget and knowing how much you can afford to pay for a home.
- Think about and know what your requirements are for a home. Don't just think about current needs. What will your future needs be?
- Don't fall in love with a home that doesn't fit your budget.
- When you are looking at homes, try to get a feel for the neighborhood to see if it's right for you. Visit at different times of the day to see if it meets your needs.
- Will the home need upgrades or repairs after you move in? Don't forget to include those costs in the total price.
- Don't shop alone. Look for an experienced real estate agent that will be able to guide you through the process and is familiar with the area where you are searching.
- Do your research. Know what the different loan options available to you include.