Planning for home ownership isn't as difficult as you may think. By following the steps below, STCU can guide you through a smooth and successful home purchase.
Make an appointment with an STCU real estate loan officer to discuss your loan options, including how to get preapproved. Call us at (509) 326-1954 or (208) 619-4000. (Please bring your W-2s, paycheck stubs, tax returns, and other documents to the meeting.)
Preapproval cost you nothing, and it will tell you how much house you can afford. That will save you and your Realtor® time and will signal to sellers that your offer is serious enough to back it up with a preapproved loan!
Make a list before you go house hunting of the features that are the important to you. For instance, if you want to purchase a home with two floors, you and your Realtor can eliminate all single-level homes for sale. In this way, you won't waste your time looking at homes that don't fit your needs.
You don't have to hire a Realtor, but there are advantages to having one. Look for someone who is familiar with the area you prefer and can tell you about the schools, parks, traffic, shopping, and home values. Don't be afraid to interview several different Realtors until you find one that seems like a good match.
Once you've located the home you want, it's time to make an offer. Your Realtor can access a database of recent, nearby home sales to compare prices and get a better sense of how much to offer. A serious offer typically requires an earnest money payment and a "purchase and sale agreement," which shows the terms of your offer and any contingencies. STCU will require an appraisal of the home. A title search will be ordered to ensure that you have clear title to the property, with no outstanding liens.
Even if the previous owner had an inspection, it is a good idea to choose your own inspector to learn the details about the home you plan to buy. A home inspection will uncover any major repairs that need to be fixed before you buy. Look for inspectors who are certified by the American Society of Home Inspectors®.
Once your offer has been accepted by the seller, it's time to "close" the loan. The closing is a formal meeting that you attend with a closing agent and possibly your Realtor. You are responsible for three things on the day of your closing -- the down payment, the closing costs, and signing documents.
| Fixed rate if... | ARM if… |
|---|---|
| Your income is stable but not regularly increasing. | Income is regularly increasing. |
| You have a fixed budget. | You have a flexible budget. |
| You expect to stay in your house more than 5 years. | You expect to stay in your house for 5-7 years or less. |
| You want lower Private Mortgage Insurance premiums. | You want a lower PMI payment in the beginning with an overall interest savings. |
The future interest rate on an adjustable rate mortgage loan is based on an "index" + a "margin." Many ARMs use the 1-year Treasury Bill for the index. The index and margin can vary and will be important to you in the future when it is time for your interest rates to change.
ARM capsThe ARM cap is the maximum limit that your interest rate or payment could change in a specified period. For example, many ARM loan rates can increase or decrease as much as 2% per year, but can never change more than 6% from the original rate during the life of the loan.
ARM conversion optionThe ARM conversion option lets you "fix" the interest rate and prevent it from changing again in the future. This option is typically offered between the second and fifth year of the loan. Most ARM loans that have this option have slightly higher interest than those without it.
Negative amortizationBeware! Loans that have a "payment cap" are often subject to negative amortization. If the interest due exceeds the required payment, this "unpaid interest" is added to the principal balance. This is called negative amortization. Be sure to ask if your ARM loan has this feature and understand its consequences.
What is an FHA Loan?An FHA loan is insured for repayment through the Federal Housing Administration. Typically, this program offers lower down payments than conventional financing. However, there are two drawbacks to an FHA Loan. First, the FHA insurance premium often cost more than insurance on a conventional loan. Second, the administration sets a maximum loan amount based on where the property is located, so you might not qualify for a larger loan. Contact a Spokane Teachers home loan officer for more information.
What about VA loans?A VA loan is guaranteed for repayment through the Department of Veterans Affairs. This program may offer lower down payments than conventional loans, but you must be an eligible veteran of the U.S. Armed Forces. There is also a maximum loan amount.
Do I need to come to the STCU Main Branch to apply?
No. You can apply online right now. Later, you may need to visit our Home Loan Department at the Main Branch to provide certain documents and sign papers. STCU real estate loan officers also work from our Liberty Lake and Post Falls branch locations.
What does "mortgage"mean?
Check our homebuying glossary to learn about common home loan terms.
What are your rates?
Click here to see STCU's current home loan rates.
What will my payment be?
You can estimate your payment using our mortgage calculator.
Should I get pre-approved for a home loan?
Yes!. Pre-approval let's you know how much house you can afford before you start shopping. Plus, we'll issue you a pre-approval letter that shows home sellers that you are a qualified buyer. Once you find your dream home, simply call us to complete your application.
