FEATURED ARTICLES

Mortgage rates continue to entice buyers to the market. According to Bankrate, the rates are at a record low, reiterating that now is the perfect time to buy.

If you are a first-time homebuyer, you may be wondering if now is the right time for you. Before you begin the hunt, it’s important to understand the larger upfront costs associated with buying a home. The more you are prepared, the better equipped you will be to enjoy homeownership. We’ll touch on a few critical areas in this article.

1. Down Payment. While a down payment is not always necessary, it could make a significant difference in your monthly mortgage. Not only does the money down lower your mortgage payment by reducing the amount you finance, but it may also help you avoid mortgage insurance. When you finance more than 80 percent of your home’s value, you are usually required to pay mortgage insurance until your mortgage is at least 20 percent below your home’s value.

2. Closing Costs. Closing costs can vary, but they are typically 2 percent to 5 percent of the purchase price. Unlike the down payment, you will be responsible for bringing funds at closing to cover the closing costs. Some lenders offer to pay a portion of the closing costs as an incentive to earn your business. Do your research to ensure the lender’s offer to pay closing costs does not come with a higher annual percentage rate to offset the incentive.

3. Home Inspection and Appraisal. Your lender will hire a third-party, independent, licensed property appraiser to give them a market-price valuation of the home you are purchasing, and you will need to foot the bill upfront. An appraiser’s fee is $300 to $450 on average.

A home inspection usually costs about the same as the appraisal. Although you are not required to obtain a home inspection, it is a good idea to have an inspection performed to be fully advised on the home's condition before purchase.  

4. Additional Expenses. Other fees such as title search and insurance, application fees, origination fees, and credit reporting fees may be due at the time of your closing. These fees are typically minimal for a single-family home and will be provided in detail by your lender. 

Buying your first home is an exciting life event. Doing your research and planning for upfront costs ahead of time can make the experience that much more enjoyable. If you are in the market to purchase a home, check the rates of your local credit union. Credit unions tend to offer the same products as banks, but often at lower rates.

First Florida Credit Union is an Equal Housing Opportunity/Lender. We do business in accordance with Federal Fair Lending Laws.