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Purchasing a home is the largest investment you can make.
We are with you every step of the way
What’s the best scenario for you? Renting or owning?
While it may seem that owning a home is the best choice, that might not necessarily be the case for everyone. The key is to consider all the factors, good and bad, that come with owning a home. Once you compare renting versus owning, then you are ready to make the best decision for your current situation. How much house can you afford?
If after considering all the contributing factors you conclude that owning a home is the best decision, you next will want to think about how much home you want to own. How much space will you need? How much space can you afford? Knowing what you can afford in a home will help drive your search in a focused direction. What type of housing suits you best? When you determine how much home you can afford, you next can consider what type of home and neighborhood best fits your needs. Before you begin looking, if you start considering the differences between a single-family home, a condo and the other housing options that exist, you’ll save a lot of time and frustration in your search. Who do you need on your team? Buying a home can be a strenuous process. You’ll want to be sure to surround yourself with a team of professionals who can assist you towards reaching your dream of homeownership.
After deciding that buying a home is the best decision for you, what’s next?
It will be good for you to evaluate how prepared you currently are to buy a home. Perhaps you have been making steps towards this goal for a while or maybe this is all new to you. Either way, the ways you have equipped yourself for this venture will be major determining factors on which loan program you choose. Do you have an amount for a down payment? What is your income to debt ratio? How is your credit status? There are a number of ways you can be prepared for this process.
OUR MONTHLY PAYMENT
Your next concern starts to be which loan program fits your needs and how to structure your monthly mortgage payments. Before moving forward, you’ll want to consider those items that make up your monthly payment and the factors that influence them. Typically referenced as PITI, your monthly mortgage payment is comprised of Principal, Interest, Taxes and Insurance. The initial amount you borrow to purchase the home and the remaining outstanding balance throughout the life of the loan is the PRINCIPAL. The charge for borrowing money is the INTEREST. Collected in an escrow account, your TAXES are assessed by your local government and typically paid to your lender as a portion of your payment. The lender will then pay them to the government upon their due date. Established in a similar fashion as your taxes, INSURANCE is collected by the lender and put into an escrow account. Your insurance is composed of two prominent types of coverage. Homeowner’s insurance provides you coverage for damages inflicted by hazards such as (but not limited to) wind and fire. Mortgage insurance typically is required for those making a smaller down payment on their loan; it provides protection for your lender in the instance that you are not able to fulfill the mortgage requirements and repay your loan.
One of the issues that most concerns homeowners is their mortgage interest rate. This is for good reason as the interest rate directly affects the monthly payments for the life of the loan. Because of this, homebuyers search for steps they can take to obtain the lowest rate available. Contributing factors to the interest rate include whether the homebuyer decides to: select a fixed or adjustable rate pay discount points choose a short or long term loan There are other special considerations that you may want to consider as you evaluate your mortgage options.
With your decision made and the groundwork laid, it’s time to put all the pieces of documentation needed to move forward into closing.
In a prequalification letter, the lender has been provided the buyer’s financial details and, based on verification of these details, agrees to give a loan to the buyer. A credit report is not required at this point. Why Bother? Knowing how excited many homebuyers can be, it can seem frustrating to add a step before the house hunt. However, there are several advantages to being prequalified/preapproved that can make it worthwhile. Credit challenges or problems that might prevent qualification are discovered and addressed early in the process. You will be able to house hunt with confidence knowing that the financial backing that is available to you.
Home sellers typically see more strength in offers from prequalified buyers.
For self-employed or commission-based buyers, a prequalification letter can demonstrate financial backing for buyers whose incomes may fluctuate more than those of salaried buyers and therefore possibly demonstrate more risk. Prequalification letters show that the lender is willing to move forward with the loan for first-time homebuyers even though they may lack a credit history that demonstrates their ability to make monthly mortgage payments. It helps equalize their offer with similar offers made by previous homeowners.
Now is also a good time to come up with a wish list for your home. When you do, consider the following:
- Type of Neighborhood: No matter how much you love the home you end up buying, you have to remember that it is not isolated from the rest of the world. Is it near areas of the city that are important to you and your family? Is it in the school district you desire for your children? Does the neighborhood appear to be a good fit for you and your family today and in the future?
- Type of Homes: As discussed earlier, there are several types of homes out there, each one providing different options in terms of space, responsibilities, upkeep, and ownership. Consider the different factors that would make either a single-family home, a condominium, a townhome or a co-op the best choice for you.
- Features of the Home: What do you need in a home and what do you want in a home? Would you like a one-story or two-story home? How many bedrooms and bathrooms would you need? Would you like an at home office? What type of backyard would you like? Consider all the different features and prioritize the features of the home you’d like to have.
At some point of your search, you’ll know. You’ll know when you find the home that best fits you and your needs. When you find a great match, you’ll want to take those next steps that can make that home yours.
EXTENDING AN OFFER
Purchasing a home is one of the few transactions that involves heavy negotiations. A REALTOR is a valuable resource to have on your side as you determine the appropriate initial offer to extend. During this portion of the process, you’ll want to consider the following:
- To demonstrate the strong financial backing and genuineness of your offer, you’ll want to have the pre-approval letter from your Bank Of England Loan Officer ready. An offer with financial security obviously is preferred by sellers.
- Facilitate all your negotiations in writing. This will provide a record of deals and decisions made as well as help clarify any misunderstandings.
- To demonstrate the seriousness of your offer, you’ll want to have money ready to use as an earnest money (or “good faith”) deposit. While the amount varies depending on your location, all of it will be placed into an escrow account until the purchase transaction is complete.
THE PURCHASE AGREEMENT
A legally binding contract between the buyer and the seller of the property, the purchase agreement outlines all terms and features of the final transaction. This can include:
- The sales price, the loan amount, the down payment and deposit
- The names of all parties involved including the buyer, the seller, the buyer’s agent, the seller’s agent, the mortgage broker/banker and any attorneys
- Time limits that might apply to the transaction
- Any contingencies that must be addressed prior to the deal being complete and finalized (such as the sale of the buyer’s present home, issues from the home inspection that might need to be repaired, etc…)
Because of special and unique features of every home transaction and the varying needs of each home buyer and home seller, purchase contracts are not exactly the same. A REALTOR, a title company or an attorney may assist in the negotiations and execution of a purchase contract; this is dependent on the state in which the transaction is being conducted.
The closer you get to the appointment, the more you will want to know what to expect at closing.
Your Mortgage Approval Starts Here
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What should I expect?
Prepaid expenses include homeowner’s insurance, mortgage insurance and the costs to set up an escrow account. An escrow account is when a lender will pay the annual insurance premiums and various taxes on the borrower’s behalf. The amount that goes into this account is based on the first year’s premiums; an additional amount also is included to pay for future premiums. Because they vary based on the type of property and the time of the closing, prepaid expenses are difficult to determine.
A mortgage point is equal to 1 percent of the mortgage loan amount and actually helps reduce the loan’s interest rate. Scenarios differ per loan. Contact for more info.
Feeling unsure about closing on a mortgage?
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Moving can be a daunting task.
Review our moving checklist for great tips on making your move go smooth.