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EBCI – How to Buy a Home

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How to Buy a Home

A Guide for First-Time Homebuyers

Buying a home is one of the biggest financial decisions you’ll make. It can feel overwhelming, but breaking the process into steps makes it easier to navigate. In this lesson, we’ll cover:

home
  • Setting a budget
  • Exploring financing options
  • Finding a home & working with a realtor
  • Home inspections & appraisals
  • Understanding the mortgage process
  • Closing the deal

By the end, you’ll have a solid understanding of how to confidently buy your first home.

1. Setting a Budget & Saving for a Home

Before you start house hunting, determine how much home you can afford. Consider:

  • Down Payment & Initial Costs:
    • If you are using the EBCI Minor’s Trust Fund, you can apply to access up to 80% of your current balance, with 25% automatically withheld for federal taxes.
    • Some buyers may also qualify for the EBCI Housing Department’s Down Payment Assistance Program, which provides up to $50,000 to cover down payment needs. This amount is forgiven after five years if you remain in the home.
    • If financing with a mortgage, expect to pay 3-20% down (or use assistance programs).
  • Closing Costs: Expect to pay 2-5% of the home’s price in fees for appraisals, inspections, and paperwork.
  • Monthly Housing Costs: Includes loan payments (if applicable), property taxes, homeowners insurance, and maintenance.
  • Other Costs: Utilities, emergency repairs, and HOA fees (if applicable).

2. Exploring Financing Options

Using the EBCI Minor’s Trust Fund

  • To determine how much you can access, submit an application to the EBCI Finance Office.
  • Up to 80% of your current balance is available, with 25% of that amount withheld for federal taxes.
  • This option allows you to purchase a home .

Traditional Mortgage Options

If you plan to finance part of your home purchase with a mortgage, follow these steps:

  1. Check with the EBCI Housing Department about their Down Payment Assistance Program —it provides up to $50,000 to cover down payment needs. The amount is forgiven after 5 years if you live in the home.
  2. Get Pre-Approved for a Mortgage:
    • Choose a lender (banks, credit unions, or mortgage brokers).
    • Provide financial documents (pay stubs, tax returns, bank statements, credit report).
    • The lender determines how much they’re willing to loan you based on your credit score, income, and debt-to-income ratio.
    • Pre-approval shows sellers you’re a serious buyer and helps determine your price range.

Sequoyah Fund Minor’s Trust Credit Builder Loan

  • If you want to build credit while buying a home with your Minor’s Trust Fund, the Sequoyah Fund offers a Minor’s Trust Credit Builder Loan of up to $50,000 at a low 3% interest rate.
  • This can be a good option for those who want to establish credit history while purchasing a home.

Personal Funds

  • If you have savings outside of the Minor’s Trust Fund, you can combine them with other financing options to cover your home purchase.

3. Finding a Home & Working with a Realtor

A real estate agent (realtor) helps guide you through the home-buying process. They:

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  • Find homes that match your criteria.
  • Schedule viewings and provide market insights.
  • Handle negotiations and paperwork.

How to Find the Right Home:

  • Make a list of must-haves (location, size, number of bedrooms, etc.).
  • Consider the neighborhood—look at schools, crime rates, and amenities.
  • Visit multiple homes before deciding.

Tip: A realtor is usually free for buyers—the seller pays their commission.

4. Home Inspections & Appraisals

Before finalizing your purchase, you need an inspection and an appraisal.

    Home Inspection

     – A professional inspector checks the home’s structure, roof, electrical, plumbing, and more.

    – If they find major issues, you can
    negotiate repairs or back out of the deal.    		Appraisal

    – The lender orders an appraisal to determine the home’s market value.

    – If the appraisal comes in lower than the purchase price, you may need to renegotiate or pay the difference.

    Tip: Never skip the inspection—it can save you from costly surprises!

    5. Understanding the Mortgage Process

    If you are financing your home with a mortgage, you’ll go through the loan approval process.

    Types of Loans:

    • Conventional Loan: Requires a good credit score and a down payment (as low as 3%).
    • FHA Loan: Government-backed loan with lower credit score requirements and a 3.5% down payment.
    • VA Loan: For eligible veterans and military personnel—often requires no down payment.

    Final Loan Approval Process:

    • Submit updated financial documents.
    • The lender verifies your income, debts, and credit score.
    • They issue a final loan approval before closing.

      Tip: Avoid making big purchases (like a car) or opening new credit accounts before closing—it could impact your loan approval.

      6. Closing the Deal

      Closing is the final step before you officially own the home.

      What Happens at Closing?

      • You’ll sign legal documents finalizing the mortgage and home transfer.
      • Pay closing costs (usually 2-5% of the home price).
      • Receive the keys to your new home!🎉

      Tip: Review all closing documents carefully to ensure accuracy before signing.

      First-Time Homebuyer Quiz