First Bank Mortgage - Resource Center

Resource Center - Mortgage FAQ

Q:	I want to buy my first home, but am unsure what to do first?
A:	There are several steps you should take: Look at your own financial situation. Establish a good credit history by paying your bills by the due dates - including your rent. Use credit sparingly and do not charge credit cards up to the limit. Try to save money for a down payment and closing costs. First Bank has several first-time homebuyer programs that need very little money down; however, you should always have some cash in reserve to handle emergencies, moving expenses, turning on utilities, etc. Decide how large of a house payment you feel comfortable paying each month. This generally gives a good starting point in pre-approving you for a mortgage. Contact a Mortgage Consultant for preapproval consideration. We will be glad to analyze your individual financial position, assist in determining your maximum mortgage, and put you in the right direction for homeownership.
Q:	How long do I have to be on my job?
A:	There is no mandatory time to be on a job. However, you must show income stability to handle the future mortgage payments. In underwriting a mortgage, emphasis is given to the last two years with no gaps in employment over 30 days. If you are self-employed, two year's tax returns should be available.
Q:	What is a sales contract?
A:	This is a legally-binding agreement between buyer and seller which, when accepted by all parties, confirms the purchase price of the property. Usually the buyer places a small amount of money in deposit as good faith (called "earnest money"). Do not sign any sales contract unless you have reviewed it carefully and perhaps even had it reviewed by an attorney. A contract is often contingent upon many things, such as mortgage loan approval, inspections of well and/or septic systems, satisfactory building inspection and termite inspection. You should make sure your own rights are protected.
Q:	Do I really need a building inspection?
A:	If you are buying a new home, you will have warranties on the roof, furnace, air conditioning, etc., and your own inspection of the home may be sufficient. However, the older the home, the more that can be wrong with it. Care should be taken to inspect the following: The foundation for cracks and leaks The roof should have 3 to 5 years of remaining life The plumbing should meet local code with no leaks The heat exchanger in a gas furnace should not be cracked The electrical service should be adequate
Q:	What does the term "fixed-rate" versus "adjustable rate" mean?
A:	Fixed-rate mortgage has the same total principal and interest payment (P&I) every month. In addition to that amount, a monthly installment of taxes, insurance, and private mortgage insurance will be added to create the total monthly mortgage payment. An adjustable-rate mortgage allows the interest rate charged to go up or down depending on market conditions. There are usually caps placed on the rates to provide the borrower protection against the rate going up too high. Because of the interest rate changes, the principal and interest amount can change at certain intervals set up in the mortgage. These loans tend to have a higher rate of risk. You have the chance the payment may go down, but you have the same chance the payment may increase.
Q:	In a fixed rate loan, can my payment ever change?
A:	Yes, while the principal and interest stay the same, your taxes and insurance paid monthly will change according to tax assessments and increases in homeowner's insurance costs.
Q:	Should I wait until interest rates drop to consider buying a home?
A:	Interest rates at this time are very reasonable. Sure, it would be nice to wait for a lower rate; however, at the same time, the price of the home can also increase. If you are ready to buy, NOW is the time to buy! First Bank is always ready to assist you in the most important purchase of your life - owning your own home. Feel free to call upon any of our loan consultants to answer your questions and put you on the road to homeownership!