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MORTGAGE KNOWLEDGE CENTER

PenFed Mortgage with Confidence

Home Buying Steps

  • Getting Started
  • Finding a Home
  • Getting a Mortgage
  • Home Ownership

Mortgage Topics

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CONVENTIONAL LOANS

Rates starting at % (APR %)¹

 

Apply before becoming a member.

After your application, we’ll help you:

1. Discover you’re eligible to become a PenFed member

2. Open a Savings/Share Account and deposit at least $5

  1. Home
  2. Mortgage Knowledge Center
  3. What Are the Steps to Buying a Home? Part 2

Getting Started, First Time Homebuyer, Homebuying 101

What Are the Steps to Buying A Home? Part 2

What You'll Learn: What Is Involved in Each Step in the Homebuying Process

EXPECTED READ TIME: 4 MINUTES

January 28, 2022

We’ve already covered several steps involved in buying a home in the first part of this three-part article series. If you haven’t yet read Part 1, you may want to do so before reading Part 2.

The previous article covered:

  • Understanding Your Housing Needs & Wants
  • Start by Checking Your Credit Score
  • Knowing What You Can Afford
  • Understanding the True Cost of Homeownership
  • Creating & Sticking to Your Budget
  • Maintaining a Stable Job History
  • Saving for a Down Payment
  • Start Shopping & Understanding Different Types of Mortgages
  • Getting Preapproved for a Mortgage

Let’s move onto some additional topics that will help you on your journey of buying a home.

How Do I Find the Best Real Estate Agent?

You may initially consider choosing a real estate agent simply because the realtor is the listing agent on a house that caught your eye. Their name is on the “Home for Sale” sign, and you call them for more information.

Here’s something to know about realtors. There are typically buyers’ agents and sellers’ agents. Just like it sounds — buyer’s agents represent the buyers. And seller’s agents represent the best interests of the sellers.

Generally, as a buyer — you won’t want to use the same agent as the seller. You’ll want an agent that is representing your best interests.

Whether you’re buying or selling, it's essential to meet and interview multiple real estate agents until you feel comfortable with your choice. You may spend a good deal of time looking at dozens of homes. Ensuring that your agent understands your needs and wants from the beginning will save everyone valuable time during the home search.

One thing to make sure of is that your realtor is available to show you homes at times that are convenient to you. An agent who isn’t available because they’re too busy with other clients or is part-time can be a source of frustration, especially in a competitive market — so choose wisely.

A real estate agent referral from a friend can be an excellent place to start. But before you agree to work with an agent, it’s wise to meet and interview several before making your final choice.

Real Estate Agent’s History

Review the agents’ history of buying and selling. Ask questions about their experience and their knowledge of the area.

Look at this process like a job interview. The agent you choose is going to be working for you and your interests. Understand their qualifications and ask them why they would make an excellent agent for your needs.

Lastly, it's also very important to choose a real estate agent who is very familiar with the neighborhood you are looking to buy in. They’ll know a good deal when it comes up, and on the reverse side — they’ll recognize when a home is overpriced. Their experience and knowledge will help you in crafting a good offer.

How Do I Find the Best Mortgage Lender?

Just as important as choosing the right real estate agent is selecting the right mortgage lender. Working with a loan officer requires trust — you are going to be giving them all of your financial and personal data. You want to make sure that you make the right choice.

Also, if you know you’re going to apply for a particular type of loan — for example, a VA loan, it’s important to work with a lender who has experience with that type of mortgage. For example, when it comes to VA loans, the best lenders understand the guidelines like the back of their hand, and they know how to move a VA loan along as fast as possible.

What Are My Housing Priorities?

When purchasing a home, there are multiple things you need to consider. Here are a few points to think about when you start viewing properties.

  • Are you focusing on a single-family home, a condo, a townhouse, or a duplex? Does the property have additional homeowner association dues?
  • Would you like to live in a gated community? If so, what special rules do they have?
  • What is the commute to and from work, and what does that look like during rush hour in terms of time and congestion? Make the trip during rush hour before you put in an offer to test this out.
  • How much property are you looking for? Do you want a large yard for kids and pets? Be sure to understand the upkeep, maintenance costs, and workload.
  • Do you have pets? Take a look at the yard, the proximity of area parks and any condo, homeowners’ association (HOA), and municipal restrictions before you finalize your buying plans.
  • What are the schools like in the neighborhood? Many people choose their communities by the quality of the schools.
  • What is the home’s proximity to parks, downtown (in an urban or suburban area), events, and other recreational and entertainment venues?
  • How much privacy are you looking for, and does the home afford you what you need?
  • Is the neighborhood quiet, or is there street or other noise that could be a problem?
  • Does the neighborhood have ample streetlights, sidewalks, and other safety features?
  • Do the neighbors keep their homes in good repair, or is the area rundown?

How Long Does It Take to Find a Home to Make an Offer On?

According to Trulia, it can take anywhere from four weeks to six months to find and close on a home. How long it will take you will vary depending on the market's temperature, the price range you’re shopping in, and many other factors.

The main point to keep in mind is that it can take months, so patience is essential. Many buyers put in several offers before they end up finding the home they purchase. So, as you’re shopping, don’t lose heart. If you don’t give up, you’ll find a home you want to buy.

Do You Want a Newer Home or One That Needs Some Updating?

Another point to consider is if you want a 100% move-in ready home that you won’t have to do any upgrades on. Or would you be open to purchasing a home that might need some updating?

That choice might come down to your other obligations and whether you have any construction skills yourself.

How Do You Tell If a Home Is Priced Right?

According to USNews.com, the best way to tell if a home is priced right is by looking at the comps over the last 6-months. And that’s for homes sold — not the prices homes are currently listed for. Often, especially in a hot market, a seller might put their home on the market for a high price just to see if they can get it.

If there aren’t any offers, the seller will start lowering their price. That’s especially true when winter is around the corner. So don’t be fooled by a high-priced home, step back and see what happens. It’s important not to overpay because, after all, a home is an investment.

Making an Offer in a Seller's Market

When it’s a sellers’ market, that means that there are more buyers than homes for sale. So, in that case, the sellers have the upper hand. They will probably be less willing to help with any buyer’s closing costs, fix deferred maintenance, or lower their price.

Making an Offer in a Buyer’s Market

On the other hand, every home shopper hopes for a buyer’s market. In that case, there are more homes for sale than buyers. It comes down to supply and demand. When there are few buyers, the sellers who want to sell their home are willing to lower the price, help pay for some buyer’s closing costs, and often make repairs the buyer is requesting.

How Do I Make an Intelligent Offer on a Home?

As stated above, choosing the best real estate agent can go a long way to crafting and understanding what kind of offer you should make. You don't want to make such a low offer that it’s insulting to the seller. Yet you also want to make an offer that provides you with the lowest possible purchase price.

Working with a smart and skillful agent, you can craft offers that could be a win-win for both buyer and seller. For example, you may have a very strong preapproval from a lender, and excellent credit, but you might lack cash up front.

In this case, the offer might be closer to the asking price, but your real estate agent could work with the seller’s real estate agent to arrange for the seller to pay some of the closing costs. This is an example of the benefits of doing your homework and choosing the best real estate agent for your needs.

In Part 3, you’ll learn the following:

  • What is a home inspection, and why do I need one?
  • What is the best mortgage loan for me?
  • What is a home appraisal, and why do I need one?
  • How much paperwork is involved in buying a home?
  • What do I need to know about home insurance and utilities?
  • What is involved in closing on a home?

For more information about PenFed Mortgages:
 

PenFed Mortgage: 

800-970-7766

Get Started

SIMILAR ARTICLES

Buying a Home Checklist — Part 1

PenFed Credit Union continues to help our members by providing a checklist for buying a home, including the costs and needs associated with homeownership.
Woman writing and sitting with moving boxes

What Are the Steps to Buying a Home? Part 3

There are multiple steps involved when buying a home, including getting a home inspection, appraisal, and closing on a home. Read about some of the steps PenFed has compiled.
man holding moving boxes

Homebuying Process Step-by-Step

In home buying, it's important to understand everything that's involved. Follow PenFed Credit Union's step-by-step process before you step into your new home.
Couple discussing buying a home

10 Reasons Why You Should Get a VA Loan

The benefits of a VA Loan can be a great option for military families and veterans. Learn about the reasons why you should get a VA Loan from PenFed Credit Union.
military personnel being handed keys to new home
image

CONVENTIONAL LOANS

Rates starting at % (APR %)¹

 

Apply before becoming a member.

After your application, we’ll help you:

1. Discover you’re eligible to become a PenFed member

2. Open a Savings/Share Account and deposit at least $5

Home Buying Steps

  • Getting Started
  • Finding a Home
  • Getting a Mortgage
  • Home Ownership

Mortgage Topics

  • VA Loans
  • Conventional Loans
  • First Time Homebuyer
  • Home Equity
  • Homebuying 101
  • Checklists
  • Adjustable Rate Mortgages
  • PenFed Top 10
  • Refinance
  • Jumbo Loans
  • FHA
  • Videos

Mortgage Products

  • Mortgage Center
  • Refinancing
  • Home Equity

PenFed HELOC

Rates as Low as % APR* with flexible use of funds

Apply before becoming a member.

After your application, we’ll help you:

1. Discover you’re eligible to become a PenFed member

2. Open a Savings/Share Account and deposit at least $5

Disclosures

1Except for holidays, rates are updated Monday through Friday at 10:15am EST. The advertised rates and points are subject to change. The information provided is based on discount point, which equals percent of the loan amount, and assumes the purpose of the loan is to purchase a property with a 30-year, conforming, fixed-rate loan. Loan amount of $400,000; loan-to-value ratio of 75%; credit score of 760; and DTI of 18% or less. The property is an existing single-family home and will be used as a primary residence. The advertised rates are based on certain assumptions and loan scenarios, and the rate you may receive will depend on your individual circumstances, including your credit history, loan amount, down payment, and our internal credit criteria. Other rates, points, and terms may be available. All loans are subject to credit and property approval.

*Prime Rate is % as of . The APR for this Home Equity Line of Credit (HELOC) is based on prime plus a margin and can change monthly. Fixed Rate Advances will be amortized over the Fixed Rate Advance Term, with the payment consisting of principal and interest. Your Annual Percentage Rate for a Fixed Rate Advance will be calculated by adding your Prime Rate, your Margin, and the Additional Fixed Rate Lock-In Margin. Your Annual Percentage Rate for a Fixed Rate Advance shall not exceed 18% and shall be equal to or greater than % for primary residences and second homes.

  • Annual Fee: Notwithstanding the foregoing, an annual fee of $99 will be assessed on each account anniversary.
  • Home equity lines of credit (HELOC) are variable rate loans and the interest rate is subject to increase after consummation of the loan on monthly basis. Closing costs range between $500 and $8,500 for credit lines of $500,000. Contact a representative for additional details.

Appraisals: PenFed will attempt to establish value via an independent method. If that method is unsuccessful, or the value is not sufficient for the amount requested, an appraisal will be required regardless of CLTV. An appraisal is always required in the following circumstances:

For all loans with a loan amount greater than $400,000.

If an appraisal is required, it must be ordered by PenFed. You will be contacted for authorization and payment prior to ordering. Appraisal fees average $550 to $850 (some run higher).

  • Closing Cost Credit: PenFed will pay most closing costs associated with a home equity line of credit (HELOC), which includes credit report, flood certification, settlement/closing, property ownership and encumbrances search, recording, property search, and quick close. Member is responsible for any city, county, and/or state taxes if the subject property is located in FL, LA, MD, MN, NY, TN, or VA. If an appraisal is required, the member, who is responsible for the fee whether or not the loan closes, will pay the cost.

Interest may be tax deductible, consult a tax advisor for further information regarding the tax deductibility of interest and charges.

Fixed Rate Advance Lock-In You may lock in an Annual Percentage Rate for Advances during the Draw Period. During your Draw Period, you may choose to have three separate Fixed Rate Advances locked in at any one time, with a maximum of two new Fixed Rate Advances per calendar year. Each Fixed Rate Advance must equal or exceed Ten Thousand Dollars ($10,000.00) and you may not request a Fixed Rate Advance that would cause the amount you owe to exceed your Credit Limit. The only term option for your Fixed Rate Advance is 240 months (“Fixed Rate Advance Term”). However, the term of your Fixed Rate Advance cannot exceed your Repayment Period.

Fixed Rate Advances will be amortized over the Fixed Rate Advance Term with the payment consisting of principal and interest. Your Annual Percentage Rate for a Fixed Rate Advance will be calculated by adding your Prime Rate, your Margin and the Additional Fixed Rate Lock-In Margin. Your Annual Percentage Rate for a Fixed Rate Advance shall not exceed 18% and shall be equal to or greater than % for primary residences and second homes and 4.75% for investment properties.

Property Insurance: Property insurance is required.

Multiple PenFed Loans: Multiple PenFed Equity loans and HELOCs are available as long as the member and collateral qualify (except Texas). For Equity loans and HELOCs the total indebtedness cannot exceed $500,000 for all PenFed Equity and HELOCs combined.

PenFed does not lend on:

  • Mobile homes
  • Co-ops or time-shares
  • Properties that are currently listed on the market for sale
  • Commercial property or property used for commercial purposes, even if a residence is part of the property
  • Undeveloped property (land only)
  • Properties with more than 4 units

Properties that are currently under major construction/renovations: Property must be fully livable, with no safety issues. (Examples: no missing rails from stairs/decks, no open walls with wires showing, missing kitchen appliances/counters, missing bath fixtures or unfinished pool).

  • Additional limitations may apply

Home Equity Line of Credit:

  • This Account has a Draw Period of 10 years, followed by a repayment period of 20 years.
  • If only minimum payments are made during the draw period, the loan balance will not decrease.
  • In Texas, the maximum CLTV available is 80% on owner occupied properties. Additional restrictions apply in Texas, so please ask a representative for details.
  • In all other states, the maximum CLTV is 85% on owner occupied properties and second homes. Additional restrictions or requirements may apply based on application characteristics.
  • Property type of Condo has a maximum CLTV of 80%.
  • The maximum CLTV available is dependent on credit qualification.
  • Rates vary depending on owner occupancy and CLTV and other loan criteria.

Minimum Loan Amount Requirements in all States:

  • For an owner occupied property or second home the minimum loan amount is $25,000 and the maximum amount is $500,000 with a CLTV of 85% or less of the fair market value.

Other terms and conditions apply; call 844-918-4307 to speak with a representative for details. All rates and offers are subject to change without notice. To receive advertised product, you must become a member of PenFed.

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This credit union is federally insured by the National Credit Union Administration. Rates are current as of September 2023 unless otherwise noted and are subject to change.

APY = Annual Percentage Yield
APR = Annual Percentage Rate


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The content you are about to view is produced by a third party unaffiliated to Pentagon Federal Credit Union. PenFed takes no responsibility for the content of the page.


IMPORTANT NOTICE

You are leaving PenFed.org and entering a third party site. PenFed Realty, LLC is wholly owned by PenFed and this referral may provide PenFed a financial or other benefit.


For more information about the relationship between PenFed and PenFed Realty, LLC, see the Affiliate Business Arrangement Disclosure.


IMPORTANT NOTICE

You are leaving PenFed.org and entering a third party Website.


The content you are about to view is produced by a third party website that is unaffiliated to Pentagon Federal Credit Union. PenFed takes no responsibility for the content of the page.


IMPORTANT NOTICE

You are leaving PenFed.org and entering a third party site. PenFed Title, LLC is wholly owned by PenFed and this referral may provide PenFed a financial or other benefit.


For more information about the relationship between PenFed and PenFed Title, LLC, see the Affiliate Business Arrangement Disclosure.


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