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Real Estate

With all the recent news regarding foreclosures and our country’s unstable economy, buying a home for newly engaged or married couples can seem like a daunting task. Despite the negative news surrounding the real estate market, there are still several first time home buyer programs available for individuals looking to purchase a home in or around Centre County. Fortunately for our area, the State College real estate market is not mirroring the national market.

Advice & Planning Tips For First Time Home Buyers

125 Windsor Street
This Cape Cod style home located in Philipsburg is a great first home for couples.

After speaking with Michelle Swope and Annette Yorks, two realtors with Keller Williams Advantage Realty in State College, the number one piece of advice they give to first time home buyers is not to rush into purchasing a home. Purchasing a home is a long-term financial commitment. Yorks advises couples to work with a local buyer’s agent. An experienced buyer’s agent will be up to date with homes on the market and can answer any questions couples may have about purchasing their first home.

Couples looking to purchase their first home but are unsure of their credit scores or have low scores should contact a local mortgage broker or bank to run their credit. Lenders can often help couples turn their credit scores around so that in a year or less, they will qualify for a mortgage. A clean credit history is extremely important in today’s mortgage market. Lenders are now requiring higher credit scores than in years past.

While numerous first time home buyer programs no longer exist, Swope acknowledged that there are still several first time home buyer programs available through Rural Housing, FHA, and PFHA. Couples looking to use these programs need to research each program with their realtor and lender since these programs may have income restrictions, housing price caps, and small down payment requirements. An experienced realtor can help direct first time home buyers to local banks offering these programs.

Individuals need to be aware that conventional interest rates have risen in the last several months. Interest rates change every day. The 30 year fixed rate mortgage has been in the 6.25% to 6.5% range. Shorter mortgage terms typically yield a lower interest rate. Individuals interested in monitoring daily interest rates can watch the yield on the 10-Year U.S. Treasury Bond to track daily interest rates.

Mortgage Financing & Payments

217 Blanchard Street, Bellefonte
Priced at $128,900 this remodeled two-story home is another great choice for first time home buyers.

Before looking at homes for sale, both Swope and Yorks suggest couples speak with several mortgage lenders or banks to obtain a mortgage pre-approval. After having a pre-approval in place, couples must decide how much money they are comfortable spending each month for their mortgage payment. Couples must remember that a mortgage payment is not strictly principle and interest but will also include real estate taxes and homeowner’s insurance. Home buyers not having 20% equity in their homes will also have mortgage insurance added to their monthly payment. The mortgage insurance will only be removed once 20% equity is reached in a home. In some instances, couples will also have to pay monthly townhouse/condo association fees.

After securing a mortgage preapproval, all home buyers are encouraged to review their Good Faith Estimate and Truth-In-Lending statement with their lending institution and realtor. A professional mortgage broker or bank should always review both of these documents with customers prior to starting the loan process. Reviewing these documents with a realtor can help potential home buyers find any hidden or extra fees being charged by their bank.

On average, from start to finish, couples can expect their loan approval process to take anywhere from 21 days to 45 days. Swope and Yorks encourage couples to remain in contact with their lender during the loan process since mortgage programs can change or be eliminated altogether during this timeframe.

Out Of Pocket Expenses

The Rural Housing program is the only local 100% financing program in the area for first time home buyers. Other programs, such as FHA require 3% down at closing.

According to Swope, most home purchase costs can be paid at settlement. However, couples need to be aware that they may need to pay for an appraisal, homeowner’s insurance policy, and inspection fees prior to settlement. Depending on the loan program, many couples can take advantage of a 3% or 6% seller’s concession at closing. This concession raises the sales price of the home by either 3% or 6% and the extra money is credited to the buyers at settlement to help cover any closing costs.

First time home buyers also need to be aware that after settlement, they are now responsible for all utility payments, taxes, condo association fees, home repairs, etc. Having an emergency cash reserve is recommended for individuals purchasing their first home. Not being able to make a mortgage payment can be detrimental to one’s credit.

Selecting A Realtor

When searching for a realtor, Yorks stresses that finding a realtor should be a comfortable fit between the potential home buyer and realtor. Purchasing a home can be a long and stressful process. Having a realtor that individuals feel comfortable with and can communicate with will make the home buying process easier. A realtor should be service oriented and have the necessary time to accept new clients. A professional realtor will schedule time for each of his or her clients and will promptly return phone calls and email messages. Yorks also suggests that individuals ask friends and relatives about realtors they have used in the past to purchase and sell homes. Past clients of realtors are great reference sources.

Couples with additional real estate questions can call either Michelle Swope or Annette Yorks at 814-272-3333.