Buying a home is no task to take lightly. You have to consider factors such as whether this is your forever home or for-now home, how far your commute from work is, what schools are in proximity (if you have kids), and of course: cost. These days Philadelphia-area homebuyers have to earn at least $199,129 to afford a median-priced home.
If you’re purchasing one for the very first time, all of this can be intimidating. Hey Philly spoke with Damien Manno, assistant vice president of real estate lending at Ardent Credit Union, to get some tips.
This conversation has been condensed and edited for length and clarity.
What are the common mistakes homebuyers make?
"Not really planning for a rainy day. So you basically poured every available cent into the home and now you have no ability to address any situations that are going to pop up.
"Another factor that some homebuyers don't take into account is who they got their mortgage through originally. Sometimes they might go for that lowest rate and the fastest talker, and then they find out later that's either not really what they thought they were signing up for or that they have issues with things like servicing, who they're making payments to, and then they can't get any help.
"Some other common misconceptions that first time homebuyers have: They think that their payments are never going to change. And they don't necessarily take into account [that] the taxes are going to go up, insurance is going to go up. If they're in an area that has a homeowners association or they live in a condo building, those fees are going to go up."
What's usually the ideal credit score when you're home buying?
"If you're looking at a [First-Time Homebuyer] loan, which is government-backed, mortgages for first-time homebuyers are really geared towards buyers that are on the lower end of the credit spectrum that may not be able to qualify with everyone through a conventional mortgage program. Sometimes they'll go into the 500s, but usually it's around 600, 620.
"For conventional lenders, typically they want to see a credit score of 660 or higher. But the higher your score, once you're in the 700s, you're getting access to better rates, and that can lead to lower costs as far as your monthly payment goes."
Have there been any trends regarding Philadelphia's housing market and how it's impacting first time buyers?
"The housing market in Philadelphia, the values have gone up pretty significantly since COVID, which is a good thing for people who already owned a home and perhaps needed to start using that equity to renovate or upgrade the home at that point. But it can impact first-time buyers because of the fact that [they’re] coming into the market at a time when everything might seem a little overpriced.
"It's more advantageous in the sense that property taxes in the city are usually much less than what you're going to be paying outside the city and in the surrounding counties. However, you usually have to bring a little more to closing in Philadelphia because of the fact that there's transfer tax involved."
What resources are available to aspiring homeowners?
"Philly First Home grant: You go through a home counseling program, and then they determine whether or not you qualify for the grant, which is at $10,000 right now. You're not repaying it unless you sell the home within a certain period of time. So, if you don't sell the home until after five years, the grant may be forgivable.
"There [are] other grants available as well that are not specific to Philadelphia, but for first-time homebuyers. There is the First Front Door grant that is sponsored by the Home Loan Bank of Pittsburgh, and we are one of the lenders that provide that grant. It only comes out once a year in the spring.
"Those grants like Philly First and First Front Door can be stackable. That means you can get more than one grant as long as the grant providers are cool with the fact that there's another grant on the property."
If you’d like additional support from Ardent Credit Union, its First-Home Concierge Program is a free counseling service available to anyone. To access a loan through Ardent, you must join the credit union. You can also access additional housing resources on its website.
