Purchasing a Home

Home Purchasing Process

Purchasing a home can seem confusing if you aren’t armed with the right knowledge and tools to help understand the process. To help, we’ve picked out some of the basic terminology associated with this process below. When you’re ready for financing, apply online or contact a loan officer who will be happy to walk you through the process at (513) 753-2440, x5501.

Pre-approved

Start off by getting pre-approved, which is the lender’s written commitment of how much they will let you borrow. You’ll need to know the approximate value of the property you are looking to purchase and its location. When you’re pre-approved you can go shopping for a home with confidence about your buying power.

Loan Application

The Mortgage application will require the details of your personal information to get a clear understanding of your financial position. The lender will then review this information in addition to your credit history.
It is important to be prepared for this appointment. You may need to provide certain documentation, such as:

  • The complete signed purchase contract
  • Proof of income
  • Statements for all checking, savings and deposit accounts
  • Income tax returns
  • W-2

You should check with the Credit Union before your appointment to know what exactly to bring.

It’s a good idea to check your credit report at least once a year to make sure it’s accurate. The government entitles you to one free credit report a year, and you should take advantage of this benefit, especially before making a large purchase, such as a home.

Fixed Rate vs. Adjustable Rate

A fixed rate mortgage will carry the same interest rate throughout the life of the loan. An adjustable rate mortgage (ARM) will give you a lower rate at the beginning of your loan term, but can rise or fall according to the market throughout the term.

Appraisal

A real estate appraisal helps to establish a property’s market value. A lender will require an appraisal when you apply for your loan to ensure that the property will sell for at least the amount of money it is lending.

Down Payment

A down payment is an amount of money the borrower pays upfront to reduce the amount of the loan. Paying a higher down payment will result in a smaller loan amount and lower monthly payments. Generally, a down payment is 20% of the home’s value, but zero-down loans are available also. If your down payment is less than 20% of the purchase price, lenders will generally require you to purchase Private Mortgage Insurance (PMI). PMI protects the lender if you default on the loan and is part of your monthly mortgage loan payment.

Escrow

An escrow account is used to hold funds for real estate taxes or insurance premiums. Some financial institutions require you to pay your predetermined escrow amount with your monthly mortgage payment.

Closing Costs

The closing costs are the fees incurred from closing on the real estate property. These fees generally include an origination fee, discount points, appraisal fee, title search and insurance, survey, taxes, deed recording fee, credit report charge and other costs assessed at settlement. The costs of closing usually are about 3% – 6% of the mortgage amount. It is important to remember to budget for these costs when determining how much you can afford to spend on a new home.

Title Transfer

This is generally the last step to the process. Once you have paid your closing costs and the seller has received their funds, the title of the home is then transferred to you.

Are You Ready to Make Your Purchase?

If you would like to become pre-approved for a Home Loan you can apply online or contact a loan officer at (513) 753-2440, x5501.

 

 
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