First Bank and Trust Mortgage - Mortgage Loan Tips

FIRST-TIME HOMEBUYERS

Buying and owning your own home can be a dream come true but it's also a big commitment. You should give consideration to your financial and lifestyle readiness and plan for homeownership carefully. Do you know how much you can afford? Is your income stable? What other expenses will you incur when you own a home? There are always expenses related to a new home from moving costs to decorating and possible landscaping. You should consider and review:

Your Credit History: We have programs for borrowers with lower credit scores but a clear credit history can be a big benefit. If you have recent negative entries on your credit report, this can complicate your approval process or even result in a loan denial. Negative credit history includes late or missed payments, a large amount of debt, collection items, and even a large number of credit inquiries indicating you may be applying for credit at numerous places. Consulting with an FBTM Loan Officer can help you be sure to avoid unnecessary credit history pitfalls.
Your Financial Stability: Changing jobs or new to a job is not necessarily a problem especially if you move within the same line of work and have an overall stable work history. Consider if your job is secure or if there may be a chance of layoffs within your company. Talking to your FBTM Loan Officer about potential changes in your employment can assist you in your home buying decision.
Your Budget: You should plan your budget carefully and consider your income and expenses if you buy a home. Your budget should include your estimated house payment, if you will have Home Owner Association (HOA) fees, expenses related to home maintenance, commuting or transportation expenses, as well as all of your regular household expenses. And, don't forget moving expenses including those related to decorating your new home. If you have limited funds set aside for unforeseen expenses, you should carefully consider how much you can truly and comfortably afford when you buy your home.
Down Payment and Closing Costs: Some loan types require minimum down payments and closing costs. As you consider a purchase, your FBTM Loan Officer will prepare an estimate of what you will need for your loan. This estimate will include things like downpayment, escrow funds (taxes and insurance), appraisal and credit report fees, title searches, and inspections. Your Loan Officer will assist you in understanding expenses related to the loan type you choose.

BUYING A NEW HOME

Life changes and sometimes that can happen when you least expect it. Whether you are moving for a career promotion, purchasing a larger home to better fit a growing family, or downsizing as you become an empty nester, buying another house may be in your future. There are numerous considerations to plan for - cost is one of the largest.

Selling your current home: Selling a house can be costly. Almost all real estate professionals will advise you to have your home in ship-shape condition. This could mean repairs, painting, de-cluttering, and could even require some improvements. Depending on your location, your sale could come quickly or take some time. If it happens quickly, you may need to plan for temporary living accommodations if your new home is not ready for move-in.
Selecting the new home and neighborhood: If you have selected a neighborhood or even the house you want, will it meet all the reasons you want to move? Consider if the neighborhood is the right location and has the amenities that you need and want. If schools or proximity to medical facilities are a critical consideration, you should be sure your new home will provide that for you. Research the cost of property taxes and the cost of living. Biting off more than you can chew is the number one reason that people find themselves unhappy after a move.
Buying up: As your family grows, typically so do your expenses. Be prepared for a move up by adjusting your budget in anticipation of this big move. Try to estimate what you will need to prepare your current home for selling as well as the expenses that come with moving up. That budget will be invaluable in making your move as easy and as stress-free as possible.
Buying down: You may be downsizing due to entering that empty-nester phase or as you prepare for retirement. As with other reasons to move, cost is often a big consideration when you downsize. Consider whether your retirement income will cover all your expenses as you enter those golden years. You may want to be closer to family and moving to a location that doesn't provide that proximity could set you up for yet another move and more expenses.

Consulting with an FBTM Mortgage Loan Officer can help you plan for this important purchase.

BUYING A SECOND OR VACATION HOME

Finally, you are ready for a second/vacation home for that much-needed rest and relaxation or just to get away from it all. Consider climate, points of interest, recreation, access to medical systems, and property amenities. Consider how much time you will spend in your special version of paradise and if you might want to rent it out in your absence.

Understanding costs: A budget that considers income potential as well as the extra expense of a second home should be considered before you begin your property search. Extra expenses include insurance which is typically more expensive for properties that are left vacant for long periods or if the property will have renters.
Upkeep and maintenance: Consider property management expense if you are not able to manage your second home. Even new properties have regular upkeep and depending on the location of your home, maintenance may include unfamiliar items such as wind and salt maintenance if you are considering a beach property or snow and power losses in snowy venues. If you intend to rent or open your home to a vacation rental, recognize the wear and tear on the property and contents - no one will take care of your home like you will.
Financing is available and our Loan Officers can walk you through the entire process. Nothing could be better than a wonderful getaway and being prepared will help you make it as relaxing as can be. You should consider:
- Maintenance and upkeep costs
- Down payments can be higher
- Approval guidelines can be more stringent

Our FBTM mortgage professionals can help guide you through the process of your second home purchase.

BUYING RENTAL OR INVESTMENT PROPERTY

The goal of buying investment properties is typically to create income and, in some cases, tax breaks. As with all major purchases of real estate, knowing what you can afford is the most important consideration. Current cash flow is important to support additional debt, and expenses should factor into your decision. Other considerations might include:

Market Conditions: Location and housing demand are key considerations when contemplating an investment in income-generating property. If you are anticipating rental income, the higher and more long-term historical demand for housing can turn a purchase into a steady rental income quickly. If you are purchasing a property as a "fixer-upper," understanding the cost of improvements and the selling price of similar properties can make the difference between making a profit or taking a loss.

Property Condition: As a landlord, you are responsible for most repairs and maintenance. The condition of the property can determine how much you will need to set aside for normal maintenance expenses as well as fixed expenses like insurance, property taxes, and HOA. As an investor with the goal of improving and selling the property, inspect the property carefully. The condition of the structure as well as equipment like HVAC units, water heaters, plumbing, electrical, and appliances can be costly to repair and/or replace.

Investment Strategy: Having a strategy and investment plan is important and will help keep you focused on your goals. Returns are not guaranteed and economic downturns can drain profits if you haven't planned for these possibilities. Making sure you have contigency funds to withstand changing conditions is a smart strategy.

Investment properties have different financing requirements as well. Consider:

Down payments are higher.
Underwriting and approval guidelines are more strict.
Credit history, stability of income and debt-to-income (DTI) ratios are variables that will be part of any loan approval.

Our FBTM Loan Officers can help get you on the road to your investment decision.

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