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Tips for Maximizing Your Home Buying Dollars

The housing market is still strong in the South Sound, and the more I learn about it, the more questions I have. I had another chat with Jennifer Arnold, Senior VP and Chief Banking Officer for Olympia Federal Savings, to get more of those questions answered.

Keys on a house keychainQ: How much does a first‐time buyer need to save to purchase their own home?

A: You can buy a home with as little as three percent down.

Borrowers should consider that it’s important to have an emergency fund in case there are unexpected repairs, or if they want to make any updates or upgrades to the home. We do have a first‐time homebuyers’ program that offers a reduced loan origination fee and a lower interest rate we typically charge. We try to help people get into a home with some savings.

Q: Housing prices are rising so fast. Many people might wonder if they can afford to buy a home. What sort of advice do you have for them?

A: Come in and sit down with one of our loan officers.

We have many different loan programs, including an affordable home loan program that might help. They may be closer to buying a home than they realized.

For those that are not ready yet, our loan officers can talk with them about what they can do to prepare, whether that means paying down debt or saving money. They can build a roadmap together that can put them on the path to homeownership.

Q: What are the advantages of a purchase remodel loan and how does that work?

A: A purchase remodel loan allows you to purchase a home that may not be perfect but also borrow the funds to make upgrades or additions.

Thurston County house inventories are at an all‐time low. It’s not always easy to find exactly what you are looking for in the location you desire. A purchase remodel loan allows you to purchase a home that may not be perfect for you in your desired location, and also borrow additional funds to make any upgrades or additions to make the home the right fit for you. The appraisal will factor in what the home value will be once the updates are done, so there’s more room to borrow to make the home exactly what you want.

Q: For those that haven’t found a home to fit their needs and are thinking about building a home, what’s the difference between a traditional mortgage and a construction loan?

A: OlyFed specializes in construction loans, and our construction loans are a little different than what other lenders may offer.

With our construction loans, the rate is locked in at the time of application through the construction phase and for the entire term of the mortgage: 15, 20, or 30 years. So, our construction loan customers don’t have to stress about whether or not rates will increase by the time they finish construction when permanent financing takes over.

During construction, our customers make interest‐only payments, which makes it more affordable because typically they have to pay for a place to live during construction. Then, it automatically rolls over into permanent financing once the construction period ends and they begin making principal and interest payments.

We have really strong relationships with many top builders in the area. We even offer an online construction management tool that allows the customer and contractor real‐time visibility to inspection results, job progress, and any funds they have available.

Q: What advice do you have for buyers who are looking to retire in the next 10 years?

A:  Look for shorter‐term loans.

When you retire, typically you are on a fixed income, and it’s good to keep expenses low as possible. Being free and clear of a mortgage can give you more flexibility with your monthly budget.

Q: I already have a mortgage. When and why are the right reasons to refinance?

A: In general, if your interest rate is more than one percent higher than what you are seeing offered as a current interest rate, it might be a good time to look into a refinance.

You also want to consider whether you plan to stay in your home long enough to recover any fees or out of pocket expenses that will come along with refinancing in interest savings over time.

Many people start out with a 30‐year mortgage, but with new careers and increased earning, you may want to consider shortening the term of your mortgage. Your payment will be higher, but the interest savings, coupled with paying off the house quicker will offer you lots of savings. In general, shorter terms usually come with lower interest rates.

Q: If we’re thinking about purchasing an investment property. What do we need to know?

A: With an investment property, you’ll need a minimum down payment of 25 percent.

Also, the interest rate is a little bit higher than on a primary residence. It’s very important to have a little bit of a reserve fund in case you don’t have a renter for a period of time, or if you need to make repairs to the property.

Q: Maybe I have enough money to pay for a home in cash. Why would I ever want to go with a mortgage?

A: Everyone’s situation is different, but I would highly recommend that even if you do have the ability to buy a home for cash that you sit down and speak with a loan officer.

Cash is more liquid and not tied up in the property. That means that if you own a home outright and realize you need cash quickly, you might want to take out an equity loan, but that takes a little time. Having a mortgage can keep that cash available. Cash can also earn more money in investments while your home continues to build equity, especially when you lock in low‐interest rates for your mortgage. In addition, the interest paid on a mortgage is often a good tax deduction. Speak to your tax advisor to see if a low‐interest mortgage is more beneficial to you.

Q: Want More Info?

A: Check out the OlyFed home loans page , email us at loancustomerservice@olyfed.com or give us a call at 360‐754‐3400.