5 Steps to a Home
Buying a Home is a Big Step in Life
It requires some preparation and a little self-education. That’s where we can help. Some of the things you’ll need to consider in the home-buying process are:
Step One: The Agent
Working with a qualified Real Estate Agent will make your search for the right home much easier. The Middlefield Banking Company can offer you a list of names of local agents if you haven’t found one on your own.
Step Two: The Prequalification
Prequalifying for a loan is nothing more than assessing your income and current debt to see how much you can afford to pay monthly. This will help you know what purchase price ranges to seek for your new home.
The lesser of your Income Ratio and your Total Debt Ratio is a safe calculation of a mortgage payment.
Step Three: What do I bring to the application appointment?
Your lender will require you to complete a loan application which will ask you about your current debts, so bringing a list of creditors, addresses and account numbers is helpful. You will also be asked for 2 years of tax returns to verify your income.
Once your application is completed, credit and income verifications are performed. Your preliminary loan approval usually takes from 3 to 5 days*. If you have a need to close within a specific timeframe, be sure to tell your lender.
Step Four: Type of Mortgage and Term
Adjustable Rate Mortgage (ARM)
Fixed Rate Mortgage
The term of a Mortgage Loan can vary and can be chosen depending on your long-range plan. They are typically available in 30, 20, 15 and 10-year loans. A 30-year loan will have a higher interest rate and lower payment, and will cost the homeowner more in interest. A shorter pay-off period will result in a lower interest rate, higher payment, and will cost less because it is paid off sooner.
Beware of “Discounted Rates”. These rates are established to get a new mortgage with the certainty that the interest rate will rise in the future. During the time of payments on the discounted rate, rarely is the homeowner paying on the principal they are simply paying interest. These are dangerous loans because the balance can actually increase during the discount time period, putting the homeowner at risk of being unable to repay the loan.
The Middlefield Banking Company will work with customers to lock in certain interest rates during the purchase process to assure the availability of those attractive rates. Ask about this service.
Step Five: The Loan Closing
Once your loan is approved, you will be asked to provide documentation of insurance on the home and property. If you do not have an insurance company, The Middlefield Banking Company can help you by providing you with a list of insurance companies from which to choose.
You may also be asked to bring proof of payment to any association fees due in connection with your particular property (like condominium fees, etc.).
Your loan officer will also help with PMI Insurance if your down payment is less than the standard 20%.
Closing your loan also requires the payment of closing costs. These include title fees, appraisal fees, credit report fees, title insurance fees, survey, inspections and the like. Your Middlefield Banking Company lender will carefully review these and any prepayments with you so you will know your obligation.
You will be asked at this time about setting up your payments. The Middlefield Banking Company is extremely flexible in this area. You can pay your mortgage monthly, bi-monthly or weekly. Depending on your frequency of payment, you may be reducing your loan term and saving money on interest with no penalty. By keeping your loan current and paying money more frequently, you will be reducing the principal faster, thus shortening your loan term. The Middlefield Banking Company also offers better rates for direct withdrawal from a MB deposit account. Ask your lender.
Your personal circumstances may be different.