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How To Get a Home Loan in Salem Oregon

How To Get a Home Loan in Salem Oregon

There’s no doubt about it — Salem, Oregon, is a desirable place to live. With a home loan, Salem, Oregon, is an affordable place to call “Home” for many would-be residents. 

Plus, right now (March 2024), some housing data suggest that Salem may be a buyer’s market. This means it could be a great time to get a mortgage and purchase a home in this area.

With that in mind, let’s see what’s involved in getting a home loan in Salem, Oregon. We’ll touch on topics like:

  • Kinds of home loans
  • Terms and conditions like interest rates and payment plans
  • Different loan programs, especially for first-time homebuyers
  • Applying for a mortgage
  • Working with a loan officer

A Glimpse into the Salem Housing Market

Let’s take a quick look at some numbers. This should give you a feel for what your money can get you in Salem.

Median home sales price (February 2024): $432,905 ($259/sqft)

Number of homes for sale (February 2024): 459

% of Owner-Occupied Homes (July 2022): 54.9%

While most properties are single-family detached homes, you can still find condos and townhomes available in Salem. There are neighborhoods for people with all different levels of financial means and lifestyle tastes. Overall, the cost of living in Salem hovers around the national average but well below that of Portland.

Check out current mortgage rates in Salem, Oregon.

Shopping for a home in Salem can get competitive. According to various sources, Salem's home prices are up slightly over last year. However, on average, homes in the area:

  • Get only 1 purchase offer
  • Take 69 days to sell
  • Sell at (38%) or below (47%) asking price

Understanding Mortgage Rates in Salem

Currently, interest rates on home loans in Salem, Oregon, are higher than in recent years. This is due to a variety of economic factors but the net result is that it's more expensive to buy a home.

On top of this, there's chatter that the inventory of homes may be decreasing.

Between interest rates creeping up and housing inventory possibly not meeting demand, some lenders may want borrowers to have more robust financial profiles than in previous periods. Lenders want better assurance that you can afford your down payment and make the monthly mortgage payments.

Check out current mortgage rates in Salem, Oregon.

How to get a home loan in Salem Oregon

Choosing the Right Mortgage Option

There are different kinds of mortgages so you can pick one that aligns with your needs. Each type of loan has its own attributes, pros, and cons. Understanding the terms and conditions of different mortgage options will help you make informed decisions.

Here's an overview of home loans available in the Salem area:

Mortgage Categories (Based on Interest Structure)

How interest rates are applied is often the distinguishing trait of home loans.

  • Fixed-rate mortgages are very popular. Their interest rate remains constant throughout the life of the loan, which makes them predictable.
  • Adjustable-rate mortgages (ARM) have fluctuating interest rates. While there's the possibility of savings (if the interest rate drops), there's also increased risk (that the interest rate will go up).
  • Hybrid ARM (aka fixed-period ARM) are a cross between a fixed-rate and variable-rate mortgage.

Types of Home Loans (Based on Other Characteristics)

There are different kinds of loans. They have unique defining features and can have fixed, adjustable, or hybrid interest rate structures.

  • FHA loans have less restrictive credit requirements and are designed to help people buy a home with a smaller down payment.
  • VA loans, available to those who served in the military, are intended to help veterans and their families become homeowners with little to no down payment. 
  • USDA loans enable people in rural areas to buy homes without a hefty down payment.
  • Jumbo loans are super-sized financing for buying very expensive properties.

When searching for a home loan in Salem, Oregon, it's important to consider the current housing market conditions and your financial situation. 

When searching for a home loan, it's important to consider the current housing market conditions and your financial situation. Fixed-rate mortgages may offer you some stability while interest rates are in flux mode. But adjustable-rate mortgages could offer initial lower payments for some buyers if rates go down again. You have to weigh all the aspects and then pick the mortgage that works for you given all the constraints and realities at play.

(But remember, if it makes sense, you may be able to refinance your mortgage in the future.)

Finding a Mortgage Lender in Salem

Salem, Oregon, is a major city. As such, there are many mortgage lenders and loan officers.

This is good news for those on the prowl for a mortgage because it means you have a lot of choice. You have room to explore multiple loans to find ones best suited to your circumstances.

However, zeroing in on the best loan for your needs is going to take some research. This roadmap should provide some guidance:

  1. Explore mortgage lenders serving the Salem area. Use online resources and review websites to research and compare different lenders.
  2. Seek referrals. Ask friends, family, and real estate agents for recommendations.
  3. Create your shortlist. Winnow down your options so you don't get overwhelmed for the next few steps.
  4. Check credentials. Ensure that the mortgage lenders you consider are licensed and reputable.
  5. Compare loans. Evaluate the loan programs and options offered by your contending lenders to see which are best suited to your situation.
  6. Meet with loan officers. Discuss your needs and available mortgage options with different lenders.
  7. Examine the terms and conditions. Carefully review the interest rates, payment plans, etc. each lender offers.
  8. Consider customer service. If the level and quality of support are important to you, rank mortgage lenders based on how helpful and pleasant they would be to work with throughout the loan process.
  9. Get pre-approved. Once you've selected a lender, begin the mortgage application.

First-Time Home Buyer Programs in Oregon

Are you new to homebuying? If so, be sure to check out loan programs tailored for first-time homebuyers. They may be your gateway to more favorable or flexible terms.

These programs may have income caps or certain eligibility requirements. The assistance provided and restrictions imposed vary across programs.

  • Oregon Housing and Community Services (OHCS) has a variety of programs. These include the Oregon Bond Residential Loan Program, OHCS Down Payment Assistance, and First-Time Home Buyer Savings Account.
  • With an Oregon Individual Development Account (IDA), your savings towards a down payment may get a partial match.
  • The U.S. Department of Housing and Urban Development (HUD) can give you information on various homeownership programs.
  • You can reach out to non-profits and the city of Salem itself. They may have insight into programs to assist first-time homebuyers.
  • Contact Valley Credit Union as we may be able to point you in the direction of resources for first-time homebuying.

Applying for Your Home Loan Application

You’ve decided on the mortgage and loan officer and are ready to move forward. Applying for your home loan is generally a straightforward process. And, with a little prep, it can be relatively quick.

Here’s how a typical loan application goes:

  • Ramp up. In advance of applying for a mortgage, check your credit record. Get any errors fixed and work to bolster your creditworthiness as needed.
  • Prepare. Gather all the necessary paperwork. You’ll likely have to show official identification, verify your income, and provide other basic information.
  • Apply. Submit your completed application form. Depending on the lender, you may be able to do this in person or online.
  • Wait. The lender will begin reviewing and assessing your application so you’re in a holding pattern for the moment.
  • Respond. Should the lender reach out for additional information, request an interview, etc., address their inquiries.
  • Get decision. When the lender is finished evaluating your application, they’ll let you know if you’re approved or not.
  • Follow through. If you’re approved, you are all set with financing in place for when you need it. If your application was denied, you can find out why and resolve those issues before applying again (or elsewhere). 

Some Additional Resources

Consumer education is important, especially when it comes to major purchases like real estate. You may find the resources below helpful as you learn about and pursue buying a home in Salem, Oregon.

High fiving after buying a house

Valley Credit Union — Salem, Oregon’s Home Loan Hub

If the next step on your homebuying to-do list is “Get a mortgage loan,” VCU can help. You’ll find favorable terms, great interest rates, flexible payment options, and knowledgeable loan officers that make getting your home loan quicker and easier than you thought possible.

Call or come in today to learn more or begin the loan application process.

About the Author

 Justin Roberts, Vice President of Lending

Justin Roberts is our Vice President of Lending and has been in the financial industry for over 18 years. He is an Oregon State University Graduate and has just completed Western CUNA Management School. When he is not focused on helping the members at Valley, you will find him coaching his two sons and volunteering his time to help develop the youth in our communities through sports.

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