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Buying a house is typically the biggest purchase couples make so you want to have your numbers line up with your goals and budget. Learn how you can find the best mortgage rates when you house hunt!
Finding the Best Mortgages Rates
Are you two getting ready to start house hunting? Congratulations!
When we were looking for our now current house, I remember the excitement of visiting and touring places.
I also remember the other side of the house hunt: getting paperwork for the preapproval letter, running the numbers to figure out our budget, and reviewing mortgage documents.
At the time, it was a bit intimidating. Knowing that this was a huge purchase, we really wanted to get it right.
Thankfully we had a great team that answered all of our questions. Now years later, we are still happy with how things turned out. We have a home that we love that's also affordable enough that we can take care of other goals and dreams.
I want you to feel the same way about the home you buy and a key part of that is finding the mortgage option for your family’s budget.
This is why I’m thrilled to pull from the archives an enlightening chat I had with Wendy Dawson. She’s the Vice President of Mortgage Lending over at Coastal Credit Union.
She decodes a lot of the jargon and gives some fantastic tips on finding the right mortgage.
In this episode we get into:
- what mistakes to avoid as a first-time homebuyer
- typical costs of being a homeowner (beyond the mortgage payment)
- what exactly are Mortgage Interest Rates, APRS, Origination Fees, and Points
Hope you enjoy it!
Resources on Getting a Great Deal on Your Mortgage
If you’re looking to buy, here are some resources to help you find a great deal with your mortgage
- Best Budget and Money Apps: Personal Capital, Tiller, Mint
- Jumpstart Your Marriage and Your Money
- Free 5 Days to $5K Course
- Basic Mortgage Terminology
- Buying a House: Explore Interest Rates
- Buying a House: Loan Estimate Explainer
- Understand Mortgage Loan Options
- Buying a Home: From Contemplation to Closing
Thank You to Our Sponsor Coastal!
Support for this podcast comes from Coastal Credit Union! If you’re living in the Raleigh Durham area and looking to bank better, come check out Coastal today.
See how Coastal can help you with your mortgage needs and Daymark Realty has a fantastic team ready to help find the perfect house for you in the Triangle area!
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We’re grateful for wonderful partners like Capitalize. Not only do they support the podcast, but they help make managing your money so much easier.
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Setting Up for House buying Success
What mistakes have you seen first-time home-buyers make when purchasing?
While saving for a down payment is a necessary step if you want to buy a house you can afford, there are other expenses you need to be aware of.
Preparing ahead for these costs will make the process go a lot of smoother for the two of you and your budget.
- Failing to plan. We encourage you to sit down with a lender first before starting the home buying process. Get pre-approved before you shop
- Not working with a good realtor. Have a buyer’s agent, rather than calling the seller’s agent based on a sign from a home you saw off the street.
- Not getting all the recommended inspections. Again, a good buyer’s agent can guide you through the process, and help you choose the inspections that will best protect you
- Not Tapping into your network. Look to family and trusted friends for recommendations for both your lender and an agent.
Beyond the Mortgage: Understand the Costs of Home Ownership
Besides the down payment, what are some typical costs that home-buyers needs to plan and save for?
- Moving expenses
- turning on utilities
- furnishings, appliances
- maintenance items / tools
- sometimes there are repairs that are needed that the sellers didn’t cover
One bit of advice we give our members is to avoid buying things before closing, especially if you are using credit, because the added credit balances could affect their final credit check prior to closing the mortgage.
Consider whether they have to buy out the remainder of a lease if they are renting.
What numbers should first time buyers think about and run BEFORE they shop around for a lender?
Start with the lender in order to get an understanding of how much home you can realistically afford.
Go in knowing how much you spend on household and reoccurring expenses now, including rent; how much they owe on other loans and what your disposable income is.
Shop lenders for the first time homebuyer program that works best for you. Look for a lender that’s willing to hold your hand through the process.
Decoding Mortgage Interest Rates, APRS, Origination Fees, and Points
Besides saving for your house, it's important to understand all the terms of your mortgage. That means becoming familiar with the jargon that lenders use.
When shopping around looking at various lenders' sites, typically I see the interest rate and APR given. What exactly is the difference between the two?
APR is a tool to standardize the comparison from one loan to the next. It is the annualized cost of the loan, including all of the interest and lender’s fees.
The CFPB recommends that borrowers should always use APR for the best comparison. The interest rate is a component of APR.
What are origination points and how do they work?
Origination and points are two different things. Origination is the lender’s fee and covers a variety of the services they provide in preparing the loan.
Fees range from 0 to 1% of the total loan. Discount points are prepaid interest and are used to buy down the rate. Both origination fees and discount points vary from lender to lender.
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This episode and show notes have been updated April 2022.