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Confidently Buying Your First House

buying a house

 

Buying your first home is an exciting, and a little scary, time in your life. There are a lot moving parts that go into the home-buying process. Most of us follow the lead of the realtor until we have keys. This doesn’t give you much leverage when it comes to negotiating price and terms.

However, if you know what to expect and do your research, you will feel more confident and in control as a buyer. So without further ado, here are some things you need to know before buying your first home.

Know what you can afford

Before you begin looking for a house, you need to set some standards to find out what you’re comfortable with paying. If you are committed to a certain price range, you will have much more discipline and won’t be easily persuaded by realtors giving you “other options” that might be out of your budget.

You should also consider your debt-to-income ratio. This is the amount of debt you currently have compared to your overall income. This ratio is going to help mortgage lenders decide how much additional debt you can handle and if they can approve a home loan for you. Ideally, your debt-to income ratio should be 36 percent or lower.

It’s important to know what’s on your credit report and be prepared to explain any discrepancies that might come up. Clearing up judgments or liens will only help you when applying for a mortgage loan. Also, it never hurts to continue building your credit and keep current debt in check.

Prepare for the down payment

Once you have an idea of what you want to pay, the next step is start looking towards the down payment. There are a couple of questions you need to ask yourself. Have you started saving up? Do you know how much you’re going to put down?

While most lenders require a down payment of at least 3%, you probably want to have a down payment of at least 20% to avoid having to buy mortgage insurance. This is a contract that insures the lender against loss in the chance that you default on your loan.

Your credit is also a big factor when it comes to talking mortgages. Having a good credit score, usually 740 or higher, can qualify for the best interest rates. There’s a reason we didn’t name this section “saving for the down payment.”

Then comes the “fun” part of getting the money for your down payment. While we always suggest save and budget, there are other options of saving up. You can always earn extra money by getting a side job, working on other projects, and utilizing other skills you have.

For example, if you’re a gifted photographer, you can start up a photography business. The possibilities are endless!

Be aware of the “hidden costs”

You most likely know the costs when it comes to moving: boxes, travel, moving services, hotel stays. However, there are some other costs that some first-time buyers might not be aware of. You’ve probably heard the term “closing costs,” but what do they mean?

  • Origination fee—Fee paid to a lender for processing a loan application.
  • Escrow costs (property taxes)—The tax based on the value of the property.
  • Appraisal fees—A payment made to someone to evaluate how much a home is worth.
  • Prepaid interest—Interest paid in advance by the borrower.
  • Title policy fees
  • Charges for title insurance

While you usually are responsible for these costs, it’s not uncommon for the buyer to try and negotiate for the seller to pay for part, sometimes all, of the closing costs.

Talk with a mortgage lender

Now it’s time to sit down with a loan officer and talk numbers. Even though you already have an idea of what you want to pay, you need to get pre-approved before you apply so you can see how much you’ll be able to borrow.

Just so you have an idea, here’s how the process goes at Neighborhood Credit Union.

After we receive a completed application and all required documentation, we will have the property appraised, verify your employment, verify your deposits, and order your title commitment. This an insurance policy that protects the insured against loss and damage due to defects in the property’s title.

Once we receive these items, your loan officer will review your loan.

If everything checks out, we will submit your file to an underwriter for final approval. Once you’re approved, accept the commitment, and all the conditions have been met, we will schedule a closing.

Pick the right time to buy

Believe it or not, strategically picking when you want to buy can go a long way. Normally people like to wait until the summer months to house hunt because they have more time and their kids are out of school. While there are more houses to choose from, the summer usually brings more competition.

According to a study by the real estate brokerage Redfin, the winter season (Dec. 21-March 20) is the best time to make a move on a new home. Even though there aren’t many houses on the market, sellers might be more flexible about negotiating prices than they would in the spring. We’re in prime time right now!

Find the house you love

This is the fun part: getting out to look at houses. Just like when you go to dealerships to test drive a car, you want to make sure you get the most out the time you have to better compare down the road.

When looking, do an initial walkthrough without focusing on any specific room to get an impression of the house as a whole. If the house gives you a good first impression, start focusing on the specifics you want in a new home. Take photos and videos so you have something to compare afterwards.

Speaking of specifics, don’t go look at houses empty handed. Take measurements of your furniture so you can see if your bed or couch will be able to comfortably fit in the house you may move into. The last thing you want is to have to buy all new furniture because you assumed everything would fit.

Finally, we’ll leave you with one last tip. As you narrow your list of finalists, go look at those houses multiple times so you can see them at different times of the day. You may learn something new just by being in the house after the sun goes down.

Bonus Tip: We have a mortgage glossary where you can find the additional definitions you need to help you better understand the language you’ll hear during the mortgage process.

Before you know it you will be on your way to buying and owning your very first home! If you have any questions or want to get started, give us a call at (877) 502-4223.


Maintaining Your Financial Fitness

Get financially fit with Neighborhood Credit Union

As we wrap up the second week of the new year, many New Year’s resolutions are already in danger of being left behind. If you made the decision to make a New Year’s resolution, the rest of January is a critical time because many Americans drop their resolutions going into February.

According to Statistic Brain Research Institute, 8.5 percent of Americans surveyed vowed to make better financial decisions in 2017. This was the 3rd most popular resolution behind losing weight and other life improvements. Think of your financial health with the same mindset as you would for your physical health because there are similarities.

From teaching yourself patience to controlling the occasional “cravings,” here’s how you can stay committed to your financial well being in 2017.

Say ‘No!’ to the impulse purchases

Even though this concept is quite simple, we humans like to make it 10 times harder. Whether it’s a flash sale at the mall or a piece of cake that looks too good to pass up, there will always be times where your self-control will be tested.

If you learn to resist impulse purchases and are aware of “empty purchases,” you’ll see your chance of success increase. When you shop at the mall, or even the grocery store, look for deals that can give you more bang for your buck.

Most importantly, saying “no” to impulse buys and unnecessary shopping sprees is how you’re going to win this battle against yourself.

Develop healthy habits

Gaining control over your impulse purchases is a fraction of the battle. Similar with your physical health, in order to successfully maintain your financial health, you need to develop healthy habits to sustain you in the long run.

Just like you would make a meal plan so you can watch your calorie intake, making a budget can help you be confident in knowing where you’re putting your money. You will be surprised to see how making a budget will show you how much money you can save and still have some left over to have some fun with. It’s all about setting priorities.

Warren Buffett once gave awesome advice on balancing saving and living. “Don’t save what’s left after spending. Instead spend what is left after saving.”

Bonus Tip: GreenPath and FinanceWorks are great tools that can help you stay true to your financial exercises.

Get trusted advice

Just as personal trainers help you get more out of your workout, having a financial advisor or friend that can keep you accountable will help you get more out of your finances. Having your budget keep you accountable is good, but it can’t set you straight when you start to go over.

If you need financial advice that goes beyond basic budgeting and savings, North Texas Capital Advisors and other advisors can help you with smart investing techniques, tax advice, and retirement planning.

This is why having someone in your corner is invaluable to your success.

Track your progress

Now it’s time for your financial weigh-in. It’s important to keep track of how you’re doing so you know if you need to change your routine to put you in the best position to succeed. Sit down every week, or every other week if you want, and see how your spending and savings compares to your budget and set list of goals.

It doesn’t take highly sophisticated accounting standards to track your financial fitness. Whether it’s a simple method where you allocate cash to different expenses or a full on financial analysis, monitor your progress in a way that best fits your style. Just don’t forget to always make sure you’re keeping to your budget and goals.

Finally, be patient. This is a process that takes time to show noticeable results. Don’t get discouraged because your savings might be lower than you want or that you gave in and bought something you know you should have passed by. We all have set backs here and there, so take heart in knowing that you can do this and financial fitness is waiting for you down the road.


Farmers Branch Woman Surprised by Neighborhood Credit Union

FARMERS BRANCH, Texas – Saving money consistently can reap surprising rewards, Gabrielle N. of Farmers Branch has learned. (The winner’s full name is being abbreviated to protect her identity.)

Gabrielle is surprised with $49,999.99 from Neighborhood Credit UnionGabrielle was stunned, speechless and a little skeptical, as Neighborhood Credit Union leaders showed up at her doorstep early Wednesday evening to surprise her with a $49,999.99 prize. The ninth-annual Prize Savings Account grand prize was nearly doubled this year to further encourage Neighborhood Credit Union members to build good savings habits.

For nearly 20 seconds, Gabrielle did not utter a word, as she stared at the oversized “check.” The actual funds were deposited directly into her Prize Savings Account.

“Are you kidding? I have never won anything in my whole life,” said an incredulous Gabrielle at last. “I don’t know what to say … besides thank you!”

A credit union member since 1998, Gabrielle said she puts a portion of each and every paycheck into her savings account.

“I’m a saver,” said Gabrielle. “I have saved money since my first job at 16 years old. It’s a mindset to make saving some of your money a priority so it becomes a habit.”

The Dallas-based credit union drew the winner’s name from the ranks of its Prize Savings Account holders. Neighborhood Credit Union established the Prize Savings Account in 2007 to encourage people to save more money, at a time when the personal savings rate had dropped to one of the lowest levels in U.S. history. In addition to paying market-rate interest on the savings, Neighborhood Credit Union awards a variety of prizes throughout the year, culminating with the grand prize at the start of each new year. The more a person has saved in his or her Prize Savings Account, the more chances he or she has to win a prize. The grand prize has been $25,000 for the past eight years, but almost doubled to $49,999.99 this year.

“Gabrielle has been a consistent saver and is a great example of how good savings habits not only help secure a better future in the long run, but sometimes surprise us with short term rewards,” said Carolyn Jordan, senior vice president at Neighborhood Credit Union.

Gabrielle said she plans to splurge on herself by replacing her broken television and getting her car fixed. As for the rest of her prize? “It’s going to stay in savings,” she said with a smile. 

See the Video of the surprise delivery: https://youtu.be/kO4uEWfUhyk


Get Your Finances Ready for 2017

New Year's calendar

 

The holidays have come and gone. Now it’s time to think ahead to 2017 and the New Year’s resolutions we already have in our minds.

Think about it, New Year’s resolutions primarily deal with working out more often, eating healthier, and getting more sleep. While tending to your physical health is great, have you thought about making resolutions focusing on your financial health? According to a 2015 study by Northwestern Mutual, 34 percent of Americans have made no effort to plan for their financial futures.

We understand analyzing your finances and making a plan can seem like a daunting task, especially if you’ve never done it before. However, if you simply commit a weekend to going over what you’re doing now and what you want to do next year, you’ll be surprised at how simple it can be.

Need some help getting started? We have you covered! Here are some ways you can feel confident in your finances as you ring in the new year.

Know where you stand

It’s smart to begin this journey by taking a look at how you did in 2016 so you can determine what you need to change, or start doing, in 2017. Knowing where you stand gives you a basis and will help point you in the right direction.

How do you determine this? Take a pulse check on your cash position by analyzing your income, assets, credit, debt, mortgage/rent, etc. Another way to evaluate 2016 is by analyzing your tax documents as you get ready to file. It’s a great way to see what you might need to change in 2017.

Bonus Tip: If you get a tax refund, that can be a great way to jumpstart a savings plan.

Set goals you know you can meet

There’s nothing wrong with being ambitious when it comes to beefing up your finances, but making huge goals only to give up on them will do nothing to help you. Setting smaller, more attainable goals will not only show progress, but it will motivate you to stay committed.

For example, say you want to add $1,500 to your savings over the next 2 months. Instead of focusing on adding $1,500, break it down into 8 week increments. That equals $187.50 each week. Now doesn’t that sound easier to manage?

The awesome thing about goal setting is that the concept can fit into any scenario you want. From paying off debt quicker to not eating out as often, setting smaller goals is a great way to help you achieve your big goals. To make things even easier, you can set up an automatic saving plan that will help keep you on track each month.

Fun Fact: According to a study done by a psychology professor at Dominican University in California, you are 42 percent more likely to achieve your goals just by writing them down.

Make a budget (Seriously…do it)

Once you know where you stand and what your goals are, next comes the most important step: the budget. It can’t be stressed enough how critical a budget is because you will never have any doubt about where your money is going. Not to mention it helps keep you in check when faced with the urge to make an unplanned purchase.

Here’s the quick rundown on how you can make a budget. First, you need to add your monthly income, subtract necessary expenses you know you will have to make. Next you will work up a plan for other optional expenses that will help you save and still have some spending money.

If you don’t want to go the spreadsheet route, GreenPath is a great tool to help you get on track. There are also other great online budget tools like FinanceWorks and Mint.

Just so you’re aware, rates are projected to rise in 2017, so it might be a good idea to compare savings account rates so you can be confident you’re earning the most possible on your savings.

Warren Buffet once said: “Do not save what is left after spending, but spend what is left after saving.” Great advice to keep in mind when delegating your money.

Be patient

This might be the hardest step, but just know that big changes can’t happen overnight. Easier said than done, right? If you stay true to your plan and keep setting small, obtainable goals, you’ll start to see your finances grow and flourish. Don’t give up because you have an unexpected car repair or medical bill.

Keep coming back, adjust as needed, and you’ll see how much having a financial plan helps your stress and your money. This is your year!

But wait there’s more! We’re also going to throw in some bonus tips from some of our awesome branch managers.

Here’s to a financially healthy 2017!


How to Watch College Football Bowl Games Without Cable

Football on TV

 
The college football bowl games are in full swing and we know you want to watch them, especially if your team is bowling this year. Nothing is more heartbreaking than wanting to watch the game and realizing you can’t because cable is too expensive. Believe me, you’re not the only football fan facing this hardship.

According to Fortune, one in five households has dropped cable with many more following suit because it’s starting to become a financial burden. Now you’re probably asking “Neighborhood CU, if I don’t have cable then how will I watch all the games?” Don’t worry, there are other options football fans across the country are taking advantage of.

Here are some ways you can watch football and not regret cutting cable.

Pay to stream

Even though this isn’t free, paying to stream games, or any shows for that matter, have become extremely popular. There are different streaming services available where you subscribe and have access to a set list of channels, including a variety of sports channels, and pay a lot less than you would with any cable subscription.

Take Sling TV for example. For $20 per month you have access to ESPN and 30 other channels. Since the majority of bowl games are on ESPN this year, you will be one happy sports fan. (Sorry all non-bowl eligible schools…) How it works is you stream using a device like a Roku, Amazon Fire TV, smart TV, or any other device and that’s all there is to it.

Best of all, streaming services are strictly month-to-month so you don’t have to worry about contracts.

Antennas can be your friend

Take note that not all bowl games will be played on ESPN. Six games will be played on FOX, ABC, or CBS. So if your TV can’t get network TV signals, then looking into a digital antenna might be a good option for you. Not only will it help you get the bowl games broadcasted on FOX, CBS, or ABC, but it will also come in handy for watching other games broadcasted on these channels.

See, you’re already winning. Don’t know where to find an antenna? Amazon is a great place to start.

Go to a watch party

If you don’t see yourself watching different games and don’t want to stream or get an antenna, going to a restaurant, sports bar, or having a watch party at someone’s house are great alternatives. Plus, if all you have to pay for is food and drinks then you’re already ahead financially.

Football, friends, food, and drinks. Can you say sports fan’s dream?

Deciding to cut cable is hard to do, but these alternatives can help you be confident in your decision knowing you can still watch sports and save money at the same time. That makes the game much more enjoyable!