Homebuying Tips from the Pros at NASA Federal

October 13, 2023

Buying your first home is arguably one of the biggest events you will experience in your lifetime. It’s a process that can seem daunting at first. But with the right preparation and forethought, as well as the Mortgage Specialists from NASA Federal Credit Union by your side, it can be smooth—even enjoyable—every step of the way. Here are the key things you will want to know before taking the plunge.

How Much House Can You Afford?

As with all significant purchases, it is important to know how much house your budget can support before you start looking. In addition to a monthly mortgage payment consisting of principal, interest, taxes, and homeowner’s insurance, there are also upfront costs like a down payment and closing costs that you will need to be prepared for.

“It is important for buyers to know their comfort zone regarding the monthly payment and the correlating purchase price, since lenders can usually pre-qualify you for more home than you may want to afford. That is why it’s a good idea to explore these options with a trusted advisor,” explains Adam Messersmith, NASA Federal First Mortgage Sales Manager. “Before you go home shopping, it is good to know the maximum amount you can get pre-qualified to borrow in addition to knowing how much you should spend to stay within your comfort zone. This helps you become a more informed consumer before falling in love with a home that may push your limits financially.”

To help you work out these numbers, NASA Federal has a Mortgage Payment Calculator  and a Mortgage Calculator available to you at your fingertips.  

Where Do You Want to Live?

Once you know how much money you can spend on a home, you will be able to figure out where you can afford to live. Check out median income, cost of living, and home sales statistics. Figure out what property taxes will be. If you have children, a major consideration should be the quality of the school system in each area. Then, come up with a list of the top neighborhoods you can afford, knowing it may need to change and grow based on what is actually available for sale at the time.

“Again, it is important to take all factors into consideration before putting a contract on a home and getting past the point of no return,” states Messersmith. “Is the home located in a planned unit development (PUD) that will require monthly association dues and, if so, how will that impact your budget? Home-buying can be a very emotional process and prudently thinking about all aspects of owning a home in a particular area is important since this is usually a long-term commitment.”

What’s on Your “Must-Have” List?

Knowing what you want in a home before you start looking can make the homebuying much more targeted and efficient. Sometimes, a top “must have” will dictate how much of your remaining wish list is actually possible, so make sure you know what you are and are not willing to compromise on. For example, is it a deal breaker that you purchase a single-family home? Or would a townhome or condominium work just as well?

Figuring out these details first, as well as being realistic about possibly not getting everything on your wish list, will not only save you time but potential disappointment as well. “There are different lending criteria and loan pricing based on the property type. For instance, condominiums require the project to meet secondary market guidelines set forth by Fannie Mae and Freddie Mac on issues such as the delinquency rate of condominium owners, review of the budget, and any deferred maintenance,” explains Messersmith. “Getting this information from the condo association may cost some additional upfront fees but it is important to know about the extra hurdles one must clear to get final approval for that type of loan.”

What Do You Need to Get Started?

Once you have the above details defined, you will need outside help to assist you with finding and financing your dream home. This includes a reliable real estate agent as well as a trusted financial partner. Home Advantage® from NASA Federal can help you find a real estate agent while also giving you free access to the multiple listing service (MLS). A NASA Federal Mortgage Loan Officer can assist with home financing, providing you with expert guidance every step of the way.

“The NASA Federal Home Advantage program has two main benefits. If you use one of the participating real estate agents, you will be eligible to receive a rebate to be applied towards your closing costs. The other benefit is having free access to the what the real estate agents use—the multiple listing service (MLS),” notes Messersmith. “This really empowers the homebuyer in expanding their home search. They can customize the features of a prospective home into the system and receive alerts as soon as one hits the market. Receiving these speedy alerts can be the difference between winning or losing a contract bid in this competitive buyer’s market.”

To be ready for this step, you will want to pull together your financial records such as pay stubs, W2s, and bank statements. If you have a co-borrower, you will need to include their paperwork as well.

What Down Payment Do You Need?

It used to be that a minimum of 20% down was required to buy a home. Not so anymore. Lenders now offer a variety of mortgages to fit buyers’ unique situations. This includes NASA Federal’s $0 down, no private mortgage insurance mortgage. This option may be a good fit for you if you have little or no down payment, want to avoid the normally required private mortgage insurance, are seeking up to 100% financing for your primary residence, and are a first-time homebuyer.

There are many other down payment options that could fit your budget like 3%, 3.50%, or 5% or more. Speaking to a registered NASA Federal Mortgage Loan Officer will help you explore these options.

What Does Your Credit Look Like?

You should never wait until you’re ready to apply for a mortgage to find out what your credit rating is. Your credit score plays an important part in the approval process and can even determine your interest rate and terms. You can learn more about how your credit score affects you, as well as obtain your free credit report, at AnnualCreditReport.com.

If you find inaccuracies or mistakes, or have any outstanding issues, this is the time to address them. Given the severity of an issue, it may even be necessary for you to spend time rebuilding your credit. As painful as this finding may be, it’s best to know what you’re up against up front, rather than waiting and being surprised.

“Credit plays a significant role in the type of pricing you receive, not only for consumer credit like car loans and credit cards, but also for a home loan where the stakes are even higher,” states Messersmith. “If you can improve your credit, you could ultimately improve the terms of the home loan you could receive, which would make a lasting impact.”

We’re Here to Help

The home buying process is a lot to take in. The Mortgage Loan Officers at NASA Federal are here to help with the home financing flexibility, options, and features that will make your first home a reality. Call us at (301) 249-1800, extension 207, or click here, to schedule an appointment today.