How to Buy a House in Oregon: A Homebuyer’s Guide

It can be a wise choice to work with a real estate agent if you want to buy a house in Oregon. Aside from showing you homes, real estate agents guide you throughout the process.

When looking for a real estate agent, the following are good traits to look for:

• Knowledge
• Integrity
• Communicative
• Licensed
• Referrals and recommendations

If you aren’t sure where to start when looking for a real estate agent, ask family members or friends for recommendations.

The cost of living changes based on where you live in Oregon. There are various factors that can impact your cost of living, such as:

• Gas and car insurance
• Groceries and restaurant costs
• Health insurance premiums
• Utilities
• Taxes
• Child care
• Pet Care

MoneyGeek’s cost of living calculator can help you estimate how much your expenses will be in a particular city. Take note that prices vary in every city in Oregon.

It’s important to research the cost of living for your target location. If you think Oregon falls within your budget, you can search for affordable neighborhoods in this state. Living in areas where things are cheaper has its ups and downs.

Zillow’s research identified Prineville and Post as two of the most affordable neighborhoods in the state. However, be aware that while you may save money on your home’s cost, you may sacrifice the convenience of amenities like gyms, supermarkets and public transportation by living in a more affordable city.

You can get varying rates based on the kind of mortgage that you get. Qualifications may also affect your rates. For instance, a homebuyer with an excellent credit score may get lower rates compared to a homebuyer with a poor credit score.

The following are the average rates for 30-year home loans in Oregon:

• Conventional home loans: 6.2%
• VA loans: 5.7%
• USDA loans: 3.3%
• USDA loans: 3.%

These loans are subject to the lenders’ requirements. Conventional loans, for example, have different requirements for credit scores, terms and basic eligibility qualifications since they’re set by private lenders.

Knowing your mortgage rates lets you know how much money you need to set aside to pay off your loan. Your mortgage will be a big factor in your monthly budget as it’s a monthly commitment that lasts for several years.

You can use MoneyGeek’s mortgage calculator to determine your mortgage rates, your potential monthly payments and the affordability of your mortgage. You can also compare the cost of FHA loans and conventional loans with our FHA vs. conventional loan calculator.

After calculating the cost of your loan, it’s best to start planning your budget and determine how much house you can afford.

Lenders base the terms of the loan on the borrower’s profile. Therefore, different borrowers may receive different rates, loan terms and loan amounts.

These are the factors that lenders consider when granting loan applications:

• Credit score: This number reflects your financial responsibility. The higher your score, the more likely you are to get approved for a loan and the better your odds of getting a lower interest rate.
• Debt-to-income (DTI) ratio: This is the ratio between your monthly loan payments and your gross income. Having a low DTI ratio means that you can afford to pay off your loan.
• Down payment: A higher down payment means a lower rate and a cheaper overall cost for your loan.
• Income: Your ability to repay your loan is dependent on your income.

Down payment requirements are based on your mortgage loan. Conventional loans usually require you to pay 20% for the down payment, but some lenders ask for smaller down payments. VA home loans, for example, have a down payment of 0% for eligible borrowers.

Your down payment amount depends on your eligibility. Some borrowers with a strong credit profile may have smaller down payments. Still, the type of mortgage loan you’re applying for is a huge factor that determines this amount.

It’s important to note, though, that bigger down payments could mean lower rates. When you have lower rates, the overall cost of your loan is also cheaper, and your monthly payments will be smaller.

Mortgage loans may have mortgage insurance. This kind of insurance is a safeguard for lenders in the event that a borrower fails to pay their debts, passes away or becomes financially incapable of meeting their obligations. It’s usually a requirement for borrowers who pay less than 20% for the down payment.

Unfortunately, it’s an added expense to the cost of the loan. Usually, USDA loans and FHA loans require mortgage insurance since down payments for these loans are significantly smaller than 20%.

Conventional loans may also have this through private mortgage insurance (PMI) for borrowers who don’t put 20% down. The premium is paid monthly, and borrowers with good credit can have affordable rates. It can also be canceled once you reach certain payment thresholds.

Buying a home is not an easy feat, especially financially. To help you with the cost, government entities may offer down payment assistance programs in Oregon to help first-time homebuyers pay for their down payment. The following are examples of these programs:

• The Department of Housing and Urban Development (HUD): HUD has several programs for first-time homebuyers. It also connects you with other government programs.
• Local down payment assistance: Cities and counties may also give assistance to homebuyers. You can check with your local organizations or government units to find these programs.

Preparing your documents speeds up the application for your loan. It’s standard procedure for lenders to ask for relevant documents regarding your identity, address and income.

Here are some documents that you need to prepare:

• W-2 forms
• A photo ID
• Statements of bank accounts
• Tax filings
• Pay stubs
• Investment disclosures
• Additional mortgage declarations

You might need to provide additional documentation in certain instances. For example, if you are self-employed, your lender might ask for profit and loss statements from your business.

Pre-approval is crucial to the homebuying process, especially for your mortgage loan. It helps simplify the process by verifying your creditworthiness and giving you the highest possible loan amount that you can borrow. This allows you to set your budget, estimate your expenses and give an offer on the house.

This process involves the submission of documents that attest to your personal information and creditworthiness. Once you’ve submitted these documents, you will generally receive a pre-approval letter within 10 business days. You can use this letter as a reference for 30 to 90 days. Make sure you don’t apply for pre-approval until you are ready to buy a home. Otherwise, you may need to apply again.

A pre-approval letter indicates the maximum loan amount that you’re eligible for. It also signifies that a lender has gone through your credit profile and deemed you as creditworthy. This letter is often required by sellers as a guarantee that there’s a high chance that you can be approved for a loan.

You’ll also find the following in your pre-approval letter:

• Purchase price
• Loan type
• Interest rate
• Loan amount
• Down payment
• Expiration date

A pre-approval letter is valid for up to 90 days, which means that your house hunting is somehow confined within this window. If you still haven’t found a home, you can renew the letter or get multiple pre-approvals from lenders. Be wary that pre-approvals can come with a hard inquiry that affects your credit score if you’re planning to have multiple pre-approvals.

A home inspection is necessary to spot the problems of a house. A regular person may miss out on a lot of details, but a licensed home inspector can do a thorough check of the whole building. They can go into every nook and cranny of the house to find potential shortcomings in these parts of the house:

• Overall construction
• Foundations
• Exterior walls
• Garage
• Roofing
• Plumbing
• Electrical
• Heating, ventilation and air conditioning or HVAC
• Fire safety
• Bathrooms
• Kitchen

The inspector can reassure you that the house is fit for you and your family to live in. It rules out your worries for your health and safety while you’re living in your new house.

Generally, home inspections are not one of the requirements before buying a home. However, there may be instances when you need a home inspection before buying a house in Oregon. For example, some lenders may require a home inspection before allowing you to get a mortgage loan. Regulations may vary depending on your location and lender.

Moreover, Oregon has state-specific requirements for the qualifications of home inspectors. They need to take an exam, complete a number of hours and take education units, among other requirements. So, it’s best to hire a duly licensed home inspector who has met all these qualifications.

An appraisal is different from a home inspection. A home inspection is a more thorough examination of the house, while a home appraisal doesn’t go into the nitty-gritty details of the house. In a home appraisal, the appraiser looks at the conditions of the home, any issues with the home and home improvements.

A home appraisal is more concerned with the value of the home with regard to its present condition. It also compares the value of the home with the value of other homes in the local market. The potential cost of building the house may also be considered in the appraisal.

You might find yourself filling out more forms and signing documents during the closing process. Being prepared for the paperwork can make the process smoother so you can save more time.

The following documents are important in the process of closing your mortgage loan:

• Closing disclosure
• Promissory note
• Mortgage, Security Instrument or Deed of Trust
• Deed of Purchase
• Proof of wire transfer or a cashier’s check

Always check the stipulations in the forms and contracts before signing anything. Be as thorough as possible when reviewing the terms and conditions of your loan to prevent future complications with your lender.

Closing costs are usually 2% to 5% of the purchase price of your home. These costs may vary depending on your lender, but they typically include these expenses:

• Attorney’s fees: This amount depends on your lawyers.
• Escrow fee: This is based on a fixed rate fee and a specific percentage of the loan amount.
• Credit report fee: In checking your creditworthiness, lenders need to see your credit report from the three major credit bureaus. It can cost around $15 to $30.
• Insurance: Different types of insurance, like home, lender’s title, owner’s title and PMI, are included in your mortgage and your closing costs.

Before you can start your life in your new home, you have to go through the process of closing your mortgage loan. This process includes preparing and signing important documents. Once you’ve begun closing your loan, you need to pay closing costs.

These expenses can include but are not limited to:

• Attorney’s fees
• Insurance premiums and taxes
• Third-party fees

When you receive the funds, contact your realtor or seller to facilitate the possession of the home. Remember that a mortgage loan is a long-term commitment. You need to pay your mortgage every month during your loan term. Setting up autopay can help you ensure you don’t miss a payment.