The home buying process can be a bit overwhelming, exciting and sometimes an emotional process. PNB is here to highlight key information and break down the steps of the process to help you feel informed and prepared to purchase your dream home!
Prepare your Finances & Save
Review your current income and debts. What is your budget? How much are you comfortable spending on a monthly home payment? We have a handy mortgage calculator to help determine a home price and monthly payment.
Know what your credit score is and compare your debt to income. You’ll want to have enough for down payment and closing costs and be able to comfortably pay your mortgage payment, including taxes and insurance, each month. We do have programs available for down payment assistance, but there will still be out of pocket costs involved at closing time. A typical down payment ranges from 5% to 20% of total the loan for conventional loans with PMI assistance. For example, when purchasing a $50,000 dollar home you would need $10,000 down with 20% down payment or $2,500 with a 5% down payment.
Prequalify for the Right Loan:
By being prequalified, you will have confidence in knowing what you can afford and what price range of homes you should be looking at. To begin this process, we would ask for you to complete an application that collects your personal information, employer, income, assets and liabilities. We will also be able to give you an estimate of what closing costs will look like for the loan amount you are prequalifying for.
Your application also gives the lender the authorization to pull your credit to see what your current credit score is, what your credit history is like, and what other debts you have. At this point we would be able to discuss what loan programs are a good fit and are available to you. The prequalification letter is essentially your golden ticket to getting in the door of the homes you want to view.
Contact a Trusted Realtor:
Once you know how much you qualify for, you can narrow your home search to the ones that fit that budget. You can preview homes online and schedule home viewings with your realtor. When you are ready to put an offer in, your agent will help you make an informed offer. If your offer is accepted, a purchase contract is drawn and typically contains a good-faith deposit to show your commitment.
Lock In your Rate:
Once you have received your contract, give a copy to the lender. Your contract will state an estimated date to close, generally 30-60 days. We will request additional information from you like proof of income and asset information. Once we receive the contract, we will send you a loan estimate that includes your approximate interest rate, monthly payment and closing costs. An appraisal will be ordered; payment is due at time of ordering the appraisal. This would also be a good time to speak with a homeowners' insurance agent. Let them know your estimated closing date and be sure to have the appropriate home insurance coverage.
Prepare to Close:
Once appraisal is complete and the mortgage is approved, among other things happening in the background, you will receive the closing disclosure that confirms the fees due at closing. On the day of the closing, any realtors, sellers and attorneys will be present. All payments will be dispersed at closing and the process will end with the keys in your hand!
As a reminder, Peoples National Bank of Kewanee’s NMLS# is 462098, and we are an Equal Housing Lender.