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Unlocking Your Dreams: A Guide To Home Ownership

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Unlocking Your Dreams: A Guide

Buying a home is a monumental milestone, and choosing the right mortgage is the key that unlocks the door to your dreams. But with so many options on the table, the mortgage landscape can feel confusing. At Midwest BankCentre, we understand the significance of this milestone, and we are here to be your trusted guide to helping you reach your goal of homeownership.

First things first: get to know your credit score.

Your credit score is a tool used by lenders to determine the likelihood that the loan can be repaid. It’s generally reported as a number between 300 to 850 and, in theory, the higher the number the more reliable the borrower is in their ability to repay the loans. Once you know your credit score, there are a few things to consider.

You may be ready to purchase a home if:

  • You know your credit score, and it is above 620.
  • You pay your bills on time and are not overextended.
  • You have an adequate emergency fund. Ideally, this should be enough to cover 3-6 months of expenses.
  • You have a regular source(s) of income.

You may not be ready to purchase a home if:

  • Your monthly debts are more than 43 percent of your monthly income.
  • You don’t have an adequate emergency fund.
  • You don’t have a credit history or know your credit score—and when you find out, it’s below 620.
  • Your income is unsteady.
Home Ownership: Can I Afford it?

One of my biggest financial achievements was when my wife and I purchased our first home. Before we were able to make that decision, we had to ask ourselves – can we really afford it?

If you’re asking yourself the same question, think about your budget. In addition to your mortgage, consider all of your other monthly expenses:

  • Must-Haves: What “must-haves” — childcare, utilities, taxes, insurance, food, and medications — are part of your monthly budget?
  • Should-Haves: There are “should-haves,” like an emergency fund for unexpected expenses.
  • Nice-to-Haves: Don’t forget the “nice to haves,” like streaming TV services, occasional meals out, or maybe after school programs for your children.

The general rule of thumb is that your mortgage payment should not exceed more than 28 percent of your monthly take-home pay.

Choosing the Right Mortgage For You:

Once you’ve determined that home ownership makes sense for you, the next step is to choose the right mortgage for you and your family.

Choosing Stability with Fixed Rate Mortgages: For many of our hardworking labor union tradespeople, stability is key. Fixed-rate mortgages offer peace of mind, with a locked-in interest rate for the entire loan term. This means you know exactly what your monthly payment will be, providing the financial certainty needed to plan for the future.

Flexibility and Savings with Adjustable-Rate Mortgages (ARMs): If flexibility is what you seek, ARMs might be the answer. Lower initial interest rates can be particularly enticing for budget-conscious first-time buyers. Our experts at Midwest BankCentre can help you weigh the benefits and risks, ensuring an informed decision that aligns with your unique circumstances.

Opening Doors with FHA and VA Loans: Midwest BankCentre believes in inclusivity, making homeownership accessible for all. FHA loans with relaxed guidelines are designed for those with moderate credit or smaller down payments. Exclusive benefits for veterans, including competitive rates and minimal costs, are offered through VA loans, honoring the service of our veterans.

Enjoying Nature with USDA Loans: USDA loans are for those who want to live away from cities and enjoy country living. A USDA loan is guaranteed by the U.S. Department of Agriculture, offers a low mortgage rate, a low monthly payment, and allows the borrower up to 100% of the appraised home value.

Tailored Solutions for Individual Circumstances

We understand that there is no one-size-fits-all solution when it comes to mortgages. Our experienced team takes the time to understand your specific needs and goals, crafting personalized mortgage solutions that are just right for you and your family. Midwest BankCentre is not just a bank; we are your partner on the journey to homeownership.

Visit us at MyHomeLoanSTL.com to learn more or to have one of our trusted home loan officers contact you to discuss your options.

Originally published in Labor Tribune's July issue of 2024 by Wes Burns, EVP of Community and Economic Development.