Home Owners

On January 12th 2011 Matthew and I became homeowners of our first little home here in Price, Utah.  It is a 2300 Square foot rambler with 4 bedrooms and 2 bathrooms.  It was built in 1956 so it needs a little bit of updating a part that both Matt and I are excited to do.  Here is a picture of the front of our home.

It took Matt and I decided to buy a house back in September and from start to finish the whole process took about 4 months from pre-approval to closing.  Becoming a home owner was definitely more time consuming and difficult than I thought it would be, but I am glad that Matt and I have our home now.  For our friends that are going to be going down this path soon here are a few pointers.  Have a good credit score (above 700 is probably best), have a good work history, have a good chunk of change in the bank (you have to pay for more than just the down payment to get a home), and pick a home in a price range you feel comfortable with.  A note on the last pointer even with the whole housing market crashing because of people buying homes they couldn't afford my bank still pre-approved us for way more than I knew we could afford and they encouraged us to buy a larger more expensive home (mainly because of the commission they get off of it).   So just because the bank thinks you can afford it, run the numbers yourself.  

One of the biggest things about home buying was picking the mortgage below I've outlined a few different home loans that you will come across.  Most you have heard about, and some you haven't.  

30-year fixed

This is your conventional mortgage that requires the 20% down, plus change for closing costs.  So that means if you plan on buying a 150,000 home with this mortgage you are looking at having a savings of $37,500 to cover your down payment and closing costs plus some change in the bank.  You will also need a credit score above 720.  

15-year fixed

This is also a conventional mortgage and it works just like the 30-year fixed but interest rates are lower for this loan and you will pay more monthly for the same home in order to pay the home off in 1/2 the time.  

FHA 30-year

This is probably the more typical 1st time home buyer loan.  This loan is backed by the US Federal Housing Administration.  You only need a credit score of 620 plus only 3.5 percent down payment (but higher monthly payment).  Also since you are not paying 20% down you have to pay for Mortgage insurance, which can add a big chunk onto your monthly payment.  

Utah Housing

This is an FHA loan where you also take out a 2nd smaller mortgage for your 3.5% down payment.  They typically provide a lower interest rate than other mortgages but they do have their limitations.  You cannot have any sort of business running out of your home, nor can you rent it if you have to move and can't sell it.  Plus your monthly payments are higher because you are not just paying for one mortgage but two at the same time, plus Mortgage insurance again.  

USDA 30-year 

While other loans require mortgage insurance if you don't have a 20% down payment in this loan you only have to pay the United States Department of Agriculture a 3.5% fee to back your loan which can be rolled into the loan itself, making it a 103.5% loan to value mortgage.  Its a good deal for those that don't have much savings but have steady paychecks.  You need a credit score of 620 or higher but have to be willing to buy in more "rural" areas.