First Time Home Buyers - Ready?

Mayo Employees Federal Credit Union- Chief Lending Officer


Potential First Time Home Buyers – Are you ready?

Here’s what’s involved, and steps to take.

Maybe you’ve begun thinking of buying your first home. With historically low interest rates, it’s a good time to buy. Owning a home also means you’re building equity for yourself, not padding your landlord’s wallet. And, you may be closer to home ownership than you think!

Buying a home is more affordable than ever; however, there are several things to consider. Assuming you are renting now, why consider buying?


Renting Versus Owning 

There are advantages to both renting and owning. Renting advantages are having little maintenance responsibility, with the flexibility to move easily. But owning advantages include building equity in your property, possible tax benefits, a sense of achievement, and freedom to decorate and landscape your home. 


Renting Versus Owning 

On the flip side, disadvantages to renting include you’ll gain nothing financially, you could face rent increases and potential maintenance headaches if your landlord isn’t responsive enough. Disadvantages to owning include you’ll pay for any surprise maintenance, for example a broken refrigerator. You’ll also pay property taxes and insurance; and as we’ve seen recently, home values can go down. 

Owning a home means having a mortgage, and qualifying for one depends on several factors, including your income and assets, job stability, debt-to-income ratio (your expenses cannot exceed 43% of your gross monthly income) and, the most important factor in qualifying for a mortgage is your credit score. Your credit score determines whether you’ll qualify for a mortgage and what your monthly payment will be because it determines your interest rate. The higher your score is, the better your interest rate will be. Your payment history is a major factor in determining your credit score, so it’s important to keep current on your bills. Kira Orth of Mayo Employees Federal Credit Union says those who have bruised credit should seek financial counseling right away. “By calling your lenders and creditors before they call you, it demonstrates you are committed to repaying your debt, but need some guidance.” You can visit to get more information on how credit scores are determined. 

Buying a home involves working with a lender to discover the size of mortgage you qualify for, loan options, how much is needed for a down payment, and closing costs. 

Orth says people are often surprised to learn how much they qualify for. “Most come in thinking a very modest loan amount and are very surprised when we tell them they could go higher.” But she says people don’t always feel comfortable borrowing their maximum. She also says often people are relieved to find out they only need to have 5% as a down payment for a home.  

If you elect to hire a realtor, meet with several to find one you like and trust.  Look for someone who is experienced and knows the community. Once you find a home you like, work with your realtor to negotiate an offer. Once an offer is accepted, consider having the home inspected so a professional can spot any serious issues, including need for repairs or replacing things like the heating system, shingles, or appliances. As the buyer you or your realtor will initiate the inspection, but when the inspection happens depends on the inspector’s schedule. 

Next steps include having the home appraised, the loan goes through the underwriting process, and last the loan is closed. This is the most exciting step; it means you own your own home! 

It’s a good time to buy, and more sales are happening in the Rochester area. Home sales are up 6% over last year. And with interest rates at historic lows, you can afford a higher mortgage than you’ll be able to do once rates begin to rise.

Mayo Employees Federal Credit Union is here to help guide members through the home buying process. We are a not-for-profit cooperative.  The only fee we earn is a discounted origination fee and we only charge the third party fees necessary to close the loan. “Lenders typically work for a commission, we don’t,” says Orth. “Our focus is on building strong relationships and trust with our members, title companies and the residential real estate community of professionals throughout Rochester, MN and all our markets.”

Orth says members select the level of service they want from applying and corresponding online to hands-on personal office appointments.  If you would like to learn more about starting the process, including direction on how to improve your credit score, please visit: or call: (507) 535-1460 or (800) 535-2129.

*Note – while the information in this article applies to everyone - membership at Mayo Employees Federal Credit Union is limited to current and retired Mayo employees, volunteers at Mayo entities, students of the Mayo Foundation, and blood or adoptive relatives of Mayo employees, volunteers or students.


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