Home Buying: Get Educated

Doing your own research before attempting to step into the home buying process is a great idea - you don’t buy a car before learning how to drive, right?  To make your dream come true, there are many steps within the home buying process and many different professionals that you will interact with along the way.

A great start to becoming educated is to attend a home buying course.  This will give you an overall scope of what to look for - and what to look out for - during your home buying adventure.  In a home buying course, you will learn more about:

• Budgeting for a down payment
• Understanding Credit reports
• Shopping for the right loan
• Shopping for a home
• Mortgage process from A – Z

Another important feature of these courses is to help you understand who will be involved in your home buying experience, which includes:

• Realtors
• Loan Officers
• Appraisers
• Building Inspectors
• Title Companies

Some courses will cost money (roughly $30-$50) but usually come with a Certificate.  This Certificate is good for 2 years and might be associated with closing cost assistance if you are qualified through Maine State Housing Authority.

 For more information and to find course schedules, visit the Homeworks website.  This particular site is affiliated with Maine State Housing, and offers course certificates that are valid for two years.  If you complete this course and finance through Maine State Housing Authority, you will also qualify for the Gift of Green (while supplies last).  The Gift of Green is a grant (that doesn’t need to be repaid) of $2,500 to be used towards closing costs.

What to do when you have less than 20% down payment

I get a lot of questions from members about down payments and how much they will need.  Typically, 20% of the purchase price is the recommended standard, but there are circumstances where that might not be possible or it may be in a homebuyer’s best interest to put down less than 20%.   In today’s post, I’d like to discuss an option for people that wish to put down a smaller down payment.

There is a new mortgage product called “CU Promise 90” that is being offered by select credit unions in Maine, such as Ocean Communities.  With CU Promise 90, you do not need Private Mortgage Insurance (PMI) as long as your down payment is 10% of the sale price. Normally PMI is needed if you financing more than 80%, but now you can keep your hard earned money in your savings account with your favorite Credit Union!

The CU Promise 90 program is designed so that you can put less money down and still have the lowest monthly payment available.   If coming up with a 10% down payment might still be difficult, the CU Promise 90 Program also allows for gift funds to be used as your down payment.  

Understanding down payments

by Denis Knox

Typically, the first step to home buying is to start saving for a down payment. A down payment on a home is the amount of cash that you will be able to put toward the house before taking any loans (i.e., a mortgage).  

Online financial calculators sometimes ask for the down payment/ prepayment as a percentage.  To find out the percentage of your down payment remember the simple percentage rule: multiply your down payment in dollars by 100 (or just add two 0’s) and then divide by the total cost of the house.  This will give you your down payment percentage (%).  

The larger your down payment is, the less money you will need to borrow to buy the house. (But when figuring out how much cash you should save to purchase a home be sure to save extra on top of the down payment for costs such as earnest money, an inspection, and closing fees!)  

There are mortgages programs for people with little or no money for a down payment.  For example, in Maine CU Promise Loans and other mortgages offer a number of options for home buyers.