- Buying or Renting
- Amount to Borrow
- Tips for Buying a Home
- Loan Options
- What to Expect
Buying a home is a big event, so whether it’s a condo downtown, a fixer-upper first home or a turnkey residence, there are a few things you might want to consider. From the actual mortgage process, homeownership costs to useful tips in buying your home, we are there to help you every step of the way.
Buying or Renting
There are pros and cons to both buying and renting. Assess your current needs and your goals for the future to determine the right option for you.
Amount to Borrow
Buying a home is one of the biggest financial decisions you’ll ever make. We can help you determine how much you can afford to meet your present financial needs as well as assist you in achieving your future goals.
Current Mortgage Rates
Interest rates fluctuate daily. Be sure to check today’s interest rates or use our Rate Watch Tool and decide when the time is right for your new home loan.
Tips for Buying a Home
Make buying your home a good experience. Know what to expect and plan ahead.
What loan options are available for you? We have home mortgage options and a range of financing solutions to help you purchase your first home.
Buying or Renting
What’s right for me?
To own or to rent, that is the question. Both options have their benefits. In today’s market, homes have become more affordable because home prices have fallen drastically, and mortgage rates are hovering at—or near—record lows.
In addition, some programs offer low or no down payment.
We can help you determine the right mortgage for your needs. To see if renting or buying is a better option for you, let’s look at the benefits of each option.
Consider the benefits of each option
Tax incentives now:
- May reduce the amount of income tax you owe because home mortgage interest and property taxes may be deductible
A growing investment later:
- Your home should increase in value over time
- As you pay your loan balance down, and your home ’s value increases, you build equity.
- You own the home once your mortgage is paid off
Saving cash now:
- Rent can be less each month than a mortgage payment
- You don’t pay property taxes
- Not responsible for homeowner’s insurance, real estate taxes and any homeowner’s association fees
Less commitment and responsibility:
- Your Landlord is responsible for property maintenance
- Only under contract for a year or less
Now that you have a better understanding of the benefits, you can choose the best option for your personal situation.
Where am I now?
When buying your first home, you have to consider your current finances and lifestyle. Ask yourself questions about your financial health:
- What can I comfortably afford?
- Will I need to make changes to my monthly budget?
- Will buying a home cause me financial strain?
- Is my income reliable?
- What is my credit history?
- If I buy, will I still be able to reach my savings goals?
- Do I have enough saved for a down payment and closing costs?
Also, ask yourself questions about your living situation:
- What kind of neighborhood do I want to live in?
- What types of schools are in the neighborhood?
- How much space do I need?
- How long do I plan to be here?
Where do I want to be?
Buying a home is a large investment decision, one of the most important you will ever make. So, consider your future and how purchasing a home will impact your goals:
- What are my financial goals after I purchase my home?
- Am I more concerned about having more cash in my pocket now or having the opportunity to build equity over time?
Still not sure about whether to buy a home? Learn more about how buying a home works from our Tips for Buying a Home.
Amount to Borrow
Want to borrow but don’t know how much? BBVA Compass can help you understand how much you should borrow and based on the amount can offer a wide assortment of bank loans and lending products to fit your financial outlook.
Calculate How Much Mortgage You Can Afford
When considering a home purchase, one of the most important questions you need to ask yourself is “How much should I borrow?” This question is different than ”How much could I borrow?” Rather than focusing on the loan limit you may be approved for, focus on how much you can spend each month without putting too much strain on your finances.
Calculate How Much Mortgage You Can Afford
A simple equation can give you a quick idea of how much mortgage you can afford. Multiply your annual income by 2 to 3 times to see a range that could be right for you to borrow.
For example, if your annual income is $30,000, you might be able to afford a mortgage of $60,000 to $90,000:
Estimating How Much You Can Afford
For a more detailed look at the amount you can afford, try our Mortgage Calculator.
What You're Paying for
Your monthly mortgage payment could include:
- Principal reduction—portion of the payment applied to the remaining amount of Loan proceeds each month.
- Interest—portion of the payment that satisfies the lender charges you for borrowing.
- Taxes—Government charges for owning property (inclusion of this in your monthly payment is sometimes optional)
- Insurance—Premiums paid for protection of your house (this is required, whether it is included in your monthly mortgage payment or not)
If taxes and insurance are part of your mortgage payment each month, the lender will open an escrow account to hold the money until the payments are due, and then pays the bills for you. This can be very convenient. In some states, escrow accounts can even earn interest.
For some mortgages , the lender will allow you to pay for taxes and insurance on your own. You would receive a property tax bill, and would also have to pay your homeowner's insurance premium. Some homeowners want to keep the money in their own savings/investment accounts to earn interest until the tax and insurance payments are due.
Additional Costs to Consider
A down payment is the cash you put down for a home at closing. It's typically a percentage of the price of the home. Keep in mind, the more money you have for a down payment, the less you will need to borrow and the less your total monthly payment will be. A larger down payment may also result in improved pricing as it may allow you to avoid having to pay Private Mortgage Insurance (PMI). It's a good rule of thumb to have 20% of the loan amount of your home for a down payment, but not always required.
EXAMPLE: For a $100,000 loan, plan to put $20,000 down. If you don't have 20% available to make the down payment, you can still purchase a home, but may be required to purchase Private Mortgage Insurance, or PMI, which protects the lender if you default on your mortgage.
Also, the lender may have special programs that require a smaller down payment. With the First Time Home Buyer Mortgage, your required down payment could be as low as 5%. Here's an example:
Possible Down Payment
Price of Home 5% Down Payment Loan Amount $184,211.00 $9,211.00 $175,000.00
- Closing costs are the charges you pay for transferring the ownership of the property from the seller and obtaining the loan from the lender. As the buyer, you can pay the costs in cash or finance them in the loan unless you negotiated for the seller to pay closing costs. If Premium Pricing options are available, it is possible to obtain a No Closing Cost loan. Premium Pricing (lender credit) is a feature offered with some loans where the closing fees are automatically financed, but the interest rate may be higher.
How Much Your Monthly Payment Will Be
Keep in mind even if you qualify for a certain loan amount, you may not be comfortable with those monthly payments. You should always consider your particular circumstances and your future financial goals. Use our Mortgage Payment Calculator to see an estimate of what your payments could be each month.
Remember, owning a home costs more than just the monthly mortgage payment. You need to consider utilities, maintenance, insurance, and other costs. The monthly payment might seem reasonable, but when you factor in these additional costs, it could be too much to handle each month.
An easy way to determine the right amount for you to borrow is pre-qualification. This first step in the mortgage process gives you a general idea how much you can afford before you begin shopping for a new home.
It is based on summary information found on your credit report in addition to the information you provide about your income and assets (which will not be verified), and gives you an estimate of your borrowing power.
It's a smart move, and many realtors will even ask if you've been pre-qualified before they'll show you homes. It's easy and free at BBVA Compass.
Call 1-888-8-LENDING or find a local mortgage specialist.
During the pre-approval process, the lender conducts the actual verification of your income, credit and assets as stated on your credit application. It is a lengthier and more involved process than pre-qualification. It provides proof to real estate agents and sellers that you're approved for a specific loan amount. The pre-approval process typically takes 5-7 business days and allows you to shop for your new home with confidence.
Tips for Buying a Home
Are you looking for some tips on buying your first home? There are some things to keep in mind to help take the stress out of finding and purchasing a home:
- Closing costs may be one of the biggest expenses associated with a home purchase. Ask your realtor if the closing expenses can be paid in full or partially by the seller.
- When planning your monthly expenses, remember that your new home loan may not only include principal and interest. There may be other expenses to consider including but not limited to the following: homeowner's insurance, PMI, HOA and flood insurance.
- Shop around for homeowner's insurance. There are many different types of coverage. Although, you can change your insurance carrier at any time, it may save you money to get the right type of insurance from the beginning.
- Consider home repairs and/or improvements before buying. Whether cosmetic or necessary, home repairs can be expensive and sometimes affect the home’s value. And, don't forget that the seller can give you an "allowance" to cover necessary repairs.
- Ask Yourself, "What Do I Want From a Home?" How many bedrooms and bathrooms do I need? What part of town do I want to live in? If you have kids or are planning to start a family, consider the school system in the areas you wish to live. Think about your commute. How long will you live there? Answering simple questions about your life and what you want from a home will put you on the right track to making the best home buying decisions.
- Find the Right Mortgage for You. It's best to do this before you start the search for your home. You'll know more about what you can afford, plus a seller will know you are serious about buying a home
- Take a Free Online Course. Want to know more about home buying and personal finances? You will learn everything from personal budgeting to home financing by taking this first time home buyer free course (allow for 30-60 minutes) prepared by the FDIC (Federal Deposit Insurance Corporation).
Thinking about buying your first home? We’ll help you understand your financing choices so you can make informed decisions about your first home loan. Let’s walk through a few basic types of home mortgages.
First Time Buyer Mortgage
Buying your first home is exciting, but it's also one of the biggest financial decisions you'll ever make: At BBVA Compass, we know you're not just purchasing a house; you're investing in your future. With our First Time Buyer mortgage you can open the door to your dream home.
Fixed Rate Mortgages
A BBVA Compass fixed rate mortgage can offer safety, security and peace of mind that keep your monthly principle and interest payments the same throughout the term of the loan.
Adjustable Rate Mortgages
Adjustable-rate mortgages (ARM) can be initially more affordable than fixed rate loans. And they can be a good deal if you know you're going to stay in your home for a relatively short period of time. But you run the very real risk that interest rates could rise sharply and drive up your monthly payments.
Government Loan Programs
Government loan programs also can make buying your first home a little easier. These programs can offer options such as low down payments, low closing costs, and easier qualification.
What to Expect
Questions about applying? BBVA Compass is with you through every step of the home financing process. Once you have found a home that fits your needs and the seller has accepted your offer, it's time to start a mortgage application.
What You Need to Apply
To ensure applying for a mortgage runs smoothly and quickly, you'll need to gather various information and documentation for each borrower applying for the loan. To get a sense of what you’ll need, see our mortgage application checklist.
Remember, the more complete your application is up-front, the faster the entire application process will go.
What Happens After You Apply
- You'll be contacted by one of our mortgage specialists who will provide details about the loan and interest rate available to you, let you know if any additional documents are needed, and answer any questions you have.
- Within 3 days of submitting your application, you'll receive a Welcome Package that includes various legal disclosures, including but not limited to “a Good Faith Estimate and Truth in Lending Statement” which you should review carefully.
- Your mortgage specialist will confirm receipt of the disclosure package, collect the upfront appraisal and credit report fees and confirm that you are ready to proceed with the transaction.
- As part of our program, first time homebuyers will be required to complete a 30-60 minute online course prepared by the FDIC. This presentation is designed to provide you with information about all costs associated with home ownership and basic financial management. This is only applicable on certain products.
- Once we have the required documents and information, your application will be reviewed and a credit decision will be made.
- The property appraiser will provide you with a copy of the appraisal report at least three days prior to your loan closing.
- Just to make sure there are no surprises at closing, our mortgage specialist will contact you a few days before closing to review your final fees, loan amount, first payment date, etc.
- If approved, a closing will be scheduled. At the closing, which will typically take place at an attorney or title company's office, you will sign your loan documents and officially become a home owner.
About the Mortgage Loan Closing Process
The closing will take place at the office of a title company or attorney in your area who will act as our agent. If you are purchasing a new home, the seller may also be at the closing to transfer ownership to you, but in some states, these two events can happen separately.
During the closing, you will review and sign several loan documents. The most important documents you will be signing at the closing include the HUD-1 Settlement Statement, Truth-in-Lending Statement (TIL), Note, and mortgages/Deed of Trust. The closing agent or attorney conducting the closing should be able to answer any questions you have. So, those are some basics about applying for mortgage. For complete details about applying for a mortgage with us, download our guide Required Documents for a Mortgage Loan.
All home equity loans and lines of credit are subject to program eligibility, underwriting and collateral requirements and approval, including credit approval.
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