Once you are ready to buy a home, consult your credit union about competitive interest rates and to find out about your mortgage options, including the term of the loan and the conditions.
Here are some things to consider before you buy your home:
Know what you can afford.
Review your monthly spending plan to estimate what you can afford to pay for a home, including the mortgage, property taxes, insurance, and monthly maintenance and utilities. Make sure you save for emergencies. Plan ahead to be sure you will be able to afford your monthly payments for several years. Check your credit report to make sure that the information in it is accurate. A higher credit score may help you get a lower interest rate on your mortgage.
Shop around.
Shopping takes time and energy, but not shopping around can cost you thousands of dollars. To find the best loan, you have to do the shopping. For more information on mortgage shopping, see Looking for the Best Mortgage–Shop, Compare, Negotiate.
Understand loan prices and fees.
Many consumers accept the first loan offered and don't realize that they may be able to get a better loan. On any given day, lenders and brokers may offer different interest rates and fees to different consumers for the same loan, even when those consumers have the same loan qualifications. Keep in mind that lenders and brokers also consider the profit they receive if you agree to the terms of a loan with higher fees, higher points, or a higher interest rate. Shopping around is your best way to avoid more expensive loans.
Know the risks and benefits of loan options.
Mortgages have many features–some have fixed interest rates and some have adjustable rates; some have payment adjustments; on some you pay only the interest on the loan for a while and then you pay down the principal (the loan amount); some charge you a penalty for paying the loan off early; and some have a large payment due at the end of the loan (a balloon payment). (Note: Federal credit unions are prohibited from charging prepayment penalties.) Consider all mortgage features, the APR (annual percentage rate), and the settlement costs. Ask your lender to calculate how much your monthly payments could be a year from now, and 5 or 10 years from now. A mortgage shopping worksheet (33kb PDF) can help you identify the features of different loans. Mortgage calculators can help you compare payments and the equity you could build with different mortgage loans.
Get advice from trusted sources.
Buying a home is the largest investment most Americans will make. A mortgage loan is also one of the most complex, most expensive financial commitments you may ever assume, and it's okay to ask for help. Talk with a trusted housing counselor or a real estate attorney that you hire to review your documents before you sign them. You can find a list of counseling resources at NeighborWorks
and on the U.S. Department of Housing and Urban Development's (HUD) website or by calling (800) 569-4287.