Buying a Home

There's no place like home. Here's how to get there.

No doubt about it: Buying a home is complicated. But when you arm yourself with a solid understanding of what to expect, you can get a jump on the details and turn it into a positive—and even fun—experience.

"ARMs" and "escrow," appraisals and closing costs—it may all be new to you. And it may sound a little strange. But when you take the time to get smart, you'll be more than ready to get started.

Choosing a loan
There are two basic types of home loans: fixed and adjustable. Understanding the benefits of each and the differences between them will help you choose the one that works best for you.

The most common loan choice, fixed rate loans allow you to keep the same interest rate and monthly payment for the life of the loan.

Fixed rate loans:

• Can be a good choice for those who want the security of a set monthly principal and interest payment
• Provide stability, but also usually have higher interest rates than start rates on adjustable-rate loans
• Are often selected by those who feel confident they won't be moving soon

Also known as flexible or floating loans, adjustable rate mortgages (ARMs) give you a fixed interest rate for an initial time period. After that, the rate adjusts. Rate adjustments are usually tied to one of several interest rate indexes. These loans have a lifetime interest-rate cap that can help protect you from soaring rates, and sometimes periodic caps.

Adjustable rate mortgages:

• Have a lower initial interest rate than a fixed rate loan might, but the rate adjusts after that initial period
• Can be a good choice if you want to minimize monthly payments, increase buying power and/or don't expect to keep the loan for the length of its term (for example, if you only expect to keep the loan for a few years)

We can help you decide which of our loan options will best meet your needs—just contact us.

What are discount "points"?
"Points" are an upfront fee that you can sometimes pay. Paying points can lower the interest rate of your loan. Each point charged is equal to one percent of the loan amount (for example, if the loan amount is $120,000, a point would be $1,200).

Paying discount points can be good idea if you plan on owning your home for seven or more years because you get a lower interest rate. They may also provide tax benefits.

Your application
Your loan application provides the lender with the information they need to decide if they can loan you the money to buy a home. So it's important to provide all the information and documentation requested. We have an application checklist to give you a head start on preparing.

A word about pre-approval
Many future homeowners choose to apply for a loan before they find a home—they get pre-approved. Here are two reasons to consider getting pre-approved:

• It can help you figure out what you can afford to spend on a home.
• It helps demonstrate to the seller that you are likely to qualify for funding and are a serious buyer.

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