So, let’s look at the primary steps you’ll take in order to buy your home.
Step 1: Getting Prepared.
There are several steps you should take as you prepare to look for your new home. We will work with you to answer questions like:
Source: Virgin Money plc
- Can I afford a mortgage? Responsible lending is something you will hear a lot about when looking at mortgages. Put simply, it aims to protect borrowers by ensuring they can take on debt they can afford. Over the last few years many changes have been made to help lenders determine if the borrower can afford their mortgage. Lenders now look more closely at your financial situation, including your income and expenses over the prior year or two. Lenders may want to understand how much you currently spend on living expenses. This makes it even more important to get your finances and credit score in order before applying for a mortgage. Learn more about getting your credit score in shape.
- How much can I afford based on what I earn? This step is often called “pre-qualification”. Prequalification is an affordability check to help you estimate the price of homes you can afford. A loan-to-income ratio tells you how much you're borrowing relative to your annual income. If you're planning to buy a house with someone else, there may be two incomes to take into consideration. You may also have bonus or overtime payments as part of your income, depending on what the lender accepts. All the income you declare will need to be evidenced through pay slips and statements. Use our mortgage loan calculator to approximate how much your new home payment may be based on its purchase price, down payment and interest rates.
- How much can I borrow? Our “How Much Can I Borrow” calculator will help you determine how much you may be able to borrow. It allows you to enter your annual income to get an estimate of the range of borrowing you might be offered.
If you're self-employed, you'll have to demonstrate your income -- so a lender can assess how much you could borrow.
- What is LTV and what do I need to know about it? As you search for a mortgage you'll come across the term ‘loan-to-value' or LTV. This refers to the amount you're looking to borrow as a percentage of the value of the property, thus it's essentially determined by the deposit amount you're able to put down. For example, if your property is valued at $100,000 and you have a down payment of $20,000 and need to borrow $80,000 (80% of the property value) your loan-to-value ratio is 80%.
Example of Loan-to-value
If you can increase your down payment you'll lower your LTV. And the lower your LTV, the better the mortgage rate you may get...and with a lower monthly payment.
Step 2: Finding your new home
Now that you're ready to find your new home, it's important to make a list of your priorities. Start by thinking about the size and style of the property you need and where you ideally want to live. Don't forget to think about things like transportation and, if you have children, the proximity to schools.
- The location
When thinking about locations, decide what factors are important to you. Do you want to be near work? How long would your commute be? How important is the school system? How close are you to family and friends? Does the property have city water and sewer? Do your research on the area you're considering. Visit at different times of the day, and talk to some of the neighbors to get a good feel for the area.
- The detail
What kind of property do you need? A single family home or a townhouse/condo? How many bedrooms and bathrooms? Attached or detached garage? These are just a few things you'll need to decide on before going to view properties. This will also help you narrow down your choices and save you time during your search.
- The condition
If you want to move in quickly you'll need to find a property in a condition that enables you to live in it without requiring any significant work. If you're willing to spend time and money remodeling a property, this might provide you with more options.
- Remember, be flexible and patient
Don't expect to find your dream house right away. Be patient and take the time to find a house that's right for you and your needs. It's also important to be flexible. You may have a list of requirements in your head, but you need to be realistic as to whether you'll find them all in one place.
- How do I find properties?
- Search on a property website such as Trulia, Zillow or a listing realtor’s own website. You can usually set up property alerts to make sure you learn about the latest properties to hit the market.
- Visit or call more than one local real estate agent to discuss what you're looking for and to get on their mailing lists.
- Look at property ads in local newspapers to see what's available and what the house prices are for the area.
- How to deal with real estate agents?
- Speak to them face-to-face - you’ll you be able to discuss what you want in more detail, and have a chance to put a name to a face. This may work to your advantage down the road if you submit an offer later on.
- Don't waste time - you should already have a list of your priorities for the property, so make sure you aren't looking at houses beyond your budget. You will waste time and the real estate agent won't take your intention to buy seriously.
- Keep talking to them - make sure you are kept up to date with new properties on the market. Having regular dialogue with the estate agent will become even more important if you decide to make an offer.
- Ok, I’m ready to view properties:
- Go with a friend, parent, or partner
- Two pairs of eyes are better than one and they might pick up on things you miss. Having someone with you also means the real estate agent is less likely to take over the viewing and you will be able to discuss things between yourselves.
- Take your time
- Buying a house is a huge decision and one that you want to get right. To stop you from feeling rushed, tell the real estate agent beforehand how much time you'll be spending at the property.
- Set your emotions aside
Source: Virgin Money plc
- You should already have a list of things you need from your new home, but here are a few questions you should be asking while you view:
- Are there any signs of dampness or mold?
- If the house has dampness there might be watermarks on the walls or ceilings. There may also be a smell of mold. Some sellers will repaint walls to cover up any damp patches so keep an eye out for fresh-looking paint.
- Is the house structurally sound?
- Can you spot any cracks? How do the windows look? Does the roof look particularly old and weathered? What is the age of the HVAC system? These are all important and potentially costly items you need to consider. If you decide to make an offer on the house, you may want an inspection of the property completed by a certified inspector.
- Can you fit everything in?
- Storage is usually a main consideration for many buyers. It's important to look at what's available to you now and what you could potentially add. Think about your clothes, your kitchen space and where you'd store items you want to keep, but don't necessarily want on show.
- Is the electrical system adequate?
- It might not seem like a big issue now, but adding more outlets or additional lighting fixtures after you've moved is an added cost and hassle for you. Inspecting the electrical panel can also give you a good idea of the condition of the wiring.
- Is the home in a federally designated flood zone? If so, you will be required to maintain flood insurance which will add to your monthly expenses.
- What direction does the house/condo face?
- Do you prefer morning or afternoon sun? When the sun is out, you'll want to make the most of it. It can sometimes be difficult to tell whether a house or garden is facing north or south, so ask the real estate agent.
- What works and what doesn't?
- Always view the property more than once and preferably at different times of the day. You might pick up on things the second time that you missed the first. A second viewing also gives you the opportunity to see the house in a different light, and find out more about the neighbors.
- I'm ready to make an offer
Now imagine that you've found a home you love. You need to be 100% sure this is the right place and that you can afford it. Before you make an offer, here are a few things to consider:
- Decide in advance to what degree you're willing or able to negotiate. Your real estate agent can help you determine a suitable offer for the property. He or she can help you find comparable listings and aid you during the negotiation process.
- Will you need to spend any money fixing the property?
- Are there any fixtures and fittings you would like included in the sale? If so, make sure your offer includes them.
- What is the maximum you can realistically afford? Do not make an offer over your limit. You need to consider your borrowing limitations (this was your pre-qualification step).
- Know how much deposit or down payment you need for the mortgage you want. Most people will typically need a deposit of 20% of the property value. Some mortgages require as little as 5% down payment.
- How to make an offer
Once you're sure you can afford the property, have the deposit required, and are happy with the price being presented, you're ready to make an offer.
- All it takes is a phone call to your real estate agent or the seller's real estate agent. Remember, you can always raise your offer but don't bid over your limit. You will also want to put your offer in writing in the form of a contract that your real estate agent will supply.
- Real estate agents are required to pass on every offer they receive to the seller. If the seller is interested in your offer, this will start the negotiation process. When entering negotiations, keep your budget in mind and be careful not to get carried away with the process.
- If the house meets all your expectations and you're in a competitive market, it might be worth entering an offer near the asking price.
- There are some considerations as to whether an offer below the asking price might be accepted. For example: if a house has been on the market a long time, if the seller wants a quick sale, or if you’re pre-approved for a mortgage sufficient to cover your selected home.
- If you’ve already sold your current home or don’t have a house to sell, you're in a good position as you may potentially finish the purchase quicker than others who are still waiting for their own house to sell. You might also want to think about making a lower offer if there are repairs or improvements that need to be carried out on the property. Getting quotes or estimates to determine how much these improvements will cost will help you refine your offer.
Step 3: Finding a mortgage:
The first thing you will discover when shopping for a mortgage is that there is a seemingly endless variety of mortgage products available. For instance, there are the “traditional” fixed rate programs of either 15 or 30 years. But there are also adjustable products, called ARMS (adjustable rate mortgage) that also have multiple options of terms and rates attached to them. Lenders may also offer “balloon mortgages” that usually lower both your interest rate and payment, but must be paid off in a shorter period of time than a conventional mortgage. Selecting a mortgage is typically a long-term commitment. Because there are so many mortgage products available and every buyer’s circumstances and needs are unique, you should seek the help of an experienced mortgage professional when you evaluate the options available to you.
Before you select a mortgage product there are a number of questions you should consider:
Source: Virgin Money plc
- How large is the mortgage for which I qualify? Hopefully, you went through a pre-qualification step at the beginning of your home buying journey so you have a general idea of the answer to this question. If not, you should immediately consult with a mortgage expert. Please access our “How Much Can I Borrow” calculator to approximate how much you may be able to borrow.
- How large of a payment can I afford? This question would be at least partially answered as a result of pre-qualification. Also keep in mind that you may want to consider your potential future earnings when estimating how much you can afford. Please use our Mortgage Loan Calculator to approximate the size of your mortgage payment.
- How long do you plan to own the home? For example, if you plan to move in five years, you may want to consider a 5 year ARM rather than a conventional fixed rate / term product.
- Can I assume the financial risk associated with adjustable rate mortgages? Interest rates are currently at near record lows. If rates were to increase and your payment adjusted upward could you afford the increase in monthly outlay? Use our “Fixed Rate vs. ARM calculator to help you with this comparison.
Step 4: Moving Day
Once you’ve had your offer accepted and have a moving day confirmed, it’s time to start preparing for the big move. Your moving day could be as soon as the day when money is transferred (closing day) or up to as many as 30 days afterward.
Here are a few things you might want to think about:
At least one month before:
Source: Virgin Money plc
- Will you be using a professional mover? If so, you’ll want to make a reservation as soon as you know your approximate closing date. Depending on the time of year, movers can become very busy and you should not assume that they can meet your requirements on short notice. Once you’ve selected a mover, be sure to clearly understand your options.
- Will the mover pack your furniture and personal goods or will you?
- Will they unpack your items at the new location?
- How do they charge (by the hour, job, or truck load)?
- Get a written estimate
- Understand their limits on liabilities and insurance in case something is broken or lost
- Confirm your closing date/move date at the earliest possible time.
- Will you be moving yourself, relying on friends for help?
- If so, you’ll need to confirm how many will be involved in the move and their availability.
- Will you need to rent a truck or a trailer to move your goods? Local rental agencies such as UHaul and others provide a wide variety of options. Be sure to rent a truck or trailer that meets your size requirements and that you feel comfortable driving. Be sure to reserve your truck or trailer as far in advance as possible. You should not assume that the rental company will have the truck or trailer you need on short notice.
- You will probably pack your own personal items such as cloths, jewelry and so forth. Be sure to identify a source of packing boxes, sized to meet your needs. Packing boxes are generally available from the company where you rent your truck or trailer.
- Thank your helpers. Moving is seldom a fun experience. It could involve lifting heavy furniture and packing boxes. Be sure to consider an appropriate way of thanking your “crew” once the move is successfully completed.
- Contact your insurance agent to arrange for appropriate levels of coverage for your new home. Insurance will need to be in place on your new home on the closing date.
Two Weeks Before:
- If you haven't started already, it's time to start packing. Start room by room, packing the things you don't need for a few weeks. This is also a great opportunity to “de-clutter”. A general rule is that if you haven’t used something in a year, you should consider options to dispose of it. This is a great time to donate your unused goods to a charity or have a moving sale.
- Although redirecting your mail will make sure you don't miss anything, you still need to change your address. Let your bank and your employer know of your new address and don't forget to update your service providers such as the cable or internet provider, credit cards and utility bills too. Today, with so many relationships being “virtual”/internet based, be sure to provide your new information to every entity that would need it.
- Cancel any relevant deliveries such as newspapers or magazines. If you have a lawn service or other providers, let them know you're moving.
- Arrange to have your electric, water, and gas meters (as applicable) read by your service providers.
- Finish off any cleaning that still needs to be done. You'll probably want to give your new place a cleaning too, so make sure you've cleaned your old house before then.
- Do a walk-through of the entire house to make sure nothing has been missed and everything is ready to go.
- Round up all the keys and garage door openers to your current home. Make sure you get them back from family and friends too.
- Make sure you have the keys to your new home, or you've arranged to collect them from the real estate agent.
- Color code or mark your boxes so you know which ones go in which room. This means you can get them in the right place the first time.
- Pack a bag of essentials such as clothes and toiletries. You may also want to set aside items from your kitchen, such as your pots and pans, some cutlery, coffee, and mugs.
- Make sure insurance coverage has been activated on the new home effective on your closing date. Also arrange to terminate coverage on your current home when it passes to the new owner.
On the Day:
- Be sure that your electric, water, and gas meters have been read by your service providers.
- Check that you haven't forgotten anything and that everything is locked up and secure.
- If you've hired a moving company, check for damage to your belongings after they've unpacked.
- You might also have some last minute questions for the seller, so ask them while you can. Where is the thermostat? What day is garbage collected? Where are the gas, water and electricity meters?
- Be sure that the electric and gas service providers have read the meters. If not, arrange for that to happen as soon as possible.
- Will your move require changes to your voter registration?
- If you have moved to a new town, it’s not too soon to secure recommendations for new healthcare providers. If your health insurance requires use of “network” providers, be sure to consider this as you make your choices.
- CONTRATULATIONS! Now's the time to enjoy your new home. Once you've unpacked, take the time to settle in and get to know the house and the neighborhood.
We Make Housing Dreams Come True Every Day
At The Peoples Savings Bank we realize that your new home may very well be the largest investment that you make in your lifetime. Finding the right mortgage is, in many ways, as important as the house itself.
We realize that there is no shortage of options where you can shop for your new mortgage. Frankly, your choice of a mortgage lender is almost unlimited and ranges from traditional banks and credit unions to new “virtual” entities that provide loans via the internet.
So, what is the difference at The Peoples Savings Bank that has propelled us to be the number one mortgage lender in Champaign County for 14 of the last 15 years?
We are different than our competitors in three very unique ways that should be very important to you:
- beginning to closing. Your mortgage advisor will help you to pre-qualify for a loan – allowing you to shop for the home of your dreams without disappointments or last minute surprises. Your mortgage advisor will help you understand all of the mortgage options available to you and will help you pick the one that best fits your individual needs.
- We are 100% focused on Champaign County. We are locally owned and managed. We are not a branch office of a bank located in a distant city. As a result, we make all decisions locally. We make those decisions based on the specifics of each borrower’s circumstances – we are not an anonymous organization spitting out rates based on credit scores and ratios.
- We have NEVER sold a mortgage in the secondary market – and it’s our goal to never do so. If you’ve ever had a mortgage that was sold to another lender after you closed, you’re probably well aware of the complications that this can create.
Let us guide you personally through the often confusing journey to your dream of home ownership. Please call or write to any of our mortgage advisors to discuss how The Peoples Savings Bank can help you realize your dream of home ownership.
Real Estate Loans
Let our loan department lead you home!
You will find the loan staff at The Peoples Savings Bank to be friendly, courteous and knowledgeable professionals offering the following lending products:
- Home Loans
- Home Equity
- Second Mortgage Loans
Our Mortgage Loan Officers are all registered through the Nationwide Mortgage Licensing System and Registry. Contact one of our trained loan professionals today for more information. Let the friendly staff of The Peoples Savings Bank find the right loan product for you!
The most important investment you will ever make is in a home of your own. This usually means establishing a long term relationship between yourself and a local financial institution. At The Peoples Savings Bank, we feel our first obligation is to make certain that the mortgage you receive from us is one you can live with comfortably. We have a variety of adjustable and fixed rate mortgage plans available; and we are sure you will be pleased with our personal service, expert advice and competitive rates.
Information Needed to Apply
- Last 2 year's tax returns wtih W2's
- Personal financial statement
- Recent Paystub
Home Equity/Second Mortgage Loans
Now you can borrow against the appraised value of your home at rates considerably lower than personal loan rates. Call one of our Qualified Mortgage Loan Officers for an appointment.
The Nationwide Mortgage Licensing System & Registry
The Nationwide Mortgage Licensing System and Registry offers NMLS Consumer Access SM, which is a free service for consumers to confirm that the bank and the mortgage lender with whom they wish to conduct business are registered with the federal system. To access this free service, please go to http://www.nmlsconsumeraccess.org/