• A couple relaxing in their new home
  • What to know when buying your first home

    You’re done with the world of renting and ready to move on to the adventure of buying your first home.

    With this new step comes a large financial commitment and even more decisions to make. For most people this is a daunting task, which is why Central Bank makes the promise to be there every step of the way so you can reach “home sweet, home” with as little stress as possible.

    To start your homebuying journey, we have some helpful tips to buying your first home. If you have any questions along the way feel free to contact one of our lenders, as they will be able to answer any and all of your mortgage questions.

  • When buying your first home you should…

    1. Borrow the amount that’s right for you.  The homebuying experience is different for everyone, so home loans shouldn’t be a “one size fits all” solution. Depending on your financial situation, the amount you need to borrow will vary from other borrowers – but as a general rule we suggest that any given family or individual shouldn’t spend more than two to two-and-a-half times their annual income on a home. To narrow down the specifics of how much home you can afford, check out our Home Affordability Calculator. It will help get you to the price that is right for you.
    2. Account for all the costs.  Besides the down payment on your future home there are additional costs that come with the whole package. When browsing the market, make sure to include these costs into your budget:
      • Closing costs – The closing cost on your home will be between two to five percent of the price of the home you are buying.
      • Ongoing costs – Account for homeowners insurance and property tax in your overall home budget.
      • Maintenance and repair costs – Over time, homes experience a lot of wear and tear, prepare your budget for these repair costs by saving at least one to three percent of your home’s value each year in anticipation of any repair costs.
    3. Apply for prequalification.  Getting prequalified means that we will have reviewed your application and based off that information, give you a quote for the amount that we think you will qualify for on a loan. Based on that, you can start searching the housing market and look for homes in the range of your prequalifying amount. 
    4. Determine your down payment.  Your down payment on your new home will depend on several factors: how much you can financially commit, the conditions of the loan, and the overall cost of the house. Depending on the stipulations of your home loan, your down payment will typically be from zero to twenty percent of the value of your home. If it is financially feasible you should put down the full twenty percent for your down payment, just make sure you don’t completely break the bank.
    5. Understand your mortgage options.  There are many loan options when borrowing for your new home, and depending on your own financial preferences, one loan may fit your payment style better.
      • Fixed-Rate Mortgage – A fixed-rate mortgage comes with a rate that will stay the same for the entirety of the loan. 
      • Adjustable-Rate Mortgage – An adjustable-rate mortgage, or ARM, will have fluctuation in the interest rate – adjusting to market conditions throughout the life of the loan.
      • FHA Loans – Only available to those that qualify, you can receive a loan insured by the Federal Housing Administration, which can typically have more favorable terms.
      • VA Loans – For those that are veterans, a loan option is especially available to you that is backed by the Department of Veterans Affairs (the VA). The down payment will be a smaller quantity than conventional loans.

    Ensure that you are insured. Home insurance is not something that you should take lightly, as a home is a very large asset that deserves precautionary measures in order to protect it. So whether it is due to damage, a liability issue, or the need to rebuild, make sure that you have the proper coverage.