Things You Should Know About Financing a Home

Things You Should Know About
Financing a Home

At First National Bank in Olney, it is our goal to make your home financing experience a pleasant one. We are here to help you whether you are refinancing your present home or purchasing your first home. We offer a variety of mortgage products at competitive rates. Our real estate loan officers will personally answer your questions and do all that they can to make your transaction worry free.

The first thing to consider when financing a home is the monthly payment amount. What can you afford to pay each month for your home? Typically, your monthly house payment should not exceed 28% of your gross monthly income.

One must also consider the total of all other debts (other loan payments, credit card payments, etc.). As a general rule, total monthly debt, which is your house payment, car payment, and any other monthly payments, should fall into a range of no more than 36% to 40% of gross monthly income.

Don't forget about the costs of monthly utility payments, maintenance and upkeep costs, as well as other spending habits when deciding on the amount you can afford.

Please choose any of the following topics:

Secondary Market Mortgages

How to Begin Financing a Home

What Else Should I Know?

Down Payment

Most home loans require a down payment. A down payment is a part of the purchase price of the home that you pay up front. The amount of down payment required can generally vary from 0% to 20%, depending on the type of mortgage. Usually, at least 5% of the purchase price is required as a down payment. A 20 % down payment is most typical and often times, most desirable. By increasing the amount of your down payment, you will be able to borrow less and consequently pay less interest over the life of the loan.

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Closing Costs

Closing costs are the cost of items required by the lender to close the loan. Closing costs vary from loan to loan. They generally include the cost of the appraisal, attorney's fees, filing fees, fees for credit reports and flood searches, as well as escrow reserves.

After you complete a loan application we will send you a document estimating your closing costs.

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PMI Insurance

In certain conditions, private mortgage insurance (PMI) may be required on a loan with less than a 20% down payment. PMI is not homeowner's insurance and, if required, should be calculated into your monthly payment.

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Escrow

As with PMI, a loan with less than a 20% down payment may require real estate taxes and homeowners insurance to be included in your monthly payment amount. The annual cost of real estate taxes and homeowner's insurance is divided into monthly payments that are deposited into an escrow account. When the taxes and insurance premiums are due, funds are deducted from the escrow account to pay those costs.

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Secondary Market Mortgages

Secondary market mortgages are quite similar to conventional mortgages through First National Bank in Olney. With a secondary market mortgage, the loan originates with First National Bank. This type of mortgage features fixed and adjustable rates for longer terms.

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How to Begin Financing a Home

This is simply a guide to financing a home with First National Bank in Olney. It addresses general areas of mortgage lending and attempts to answer basic financing questions. For more information, contact any of the real estate loan officers at First National Bank in Olney.

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What Else Should I Know?

First National Bank in Olney is a financial leader in the Olney area. We pride ourselves on the exceptional service each and every customer receives. Our product list continues to grow as we provide the financial services and products our customers want and need.

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