When you buy a home, you may also enjoy several
financial benefits that could potentially help your financial situation
for the rest of your life:
- Interest Deductions
You may be able to deduct the interest on your home loan, along with
the real estate taxes that you pay each year, on your federal income
tax return. Be sure to consult your tax advisor. Because of this tax
advantage, it may actually be cheaper to own than rent.
You build equity in your home as the value of your loan decreases
and as the value of your property increases. This can be used to
finance other major purchases, or as a down payment on a future
- Protection Against Inflation
Home ownership can help you counteract rising inflation. Although
past performance cannot guarantee future trends, real estate has
historically appreciated at a higher rate than inflation in most
Buying a home requires more than just money for a down
payment. You also have to be committed to taking control of your
surroundings and your finances. FNCB works with you throughout the home
buying process to help make buying your first home as easy as possible.
Together, we can help you understand how owning a home is more
attainable—and understandable—than you may realize.
BUYING A HOME
From making an offer to closing you loan, we can help you get
prepared and make your move a success.
WHAT SHOULD I KNOW ABOUT
BUYING A HOME?
Finding your new home can be an exciting time. Before you start your
serious house-hunting, take some time to make sure you’re prepared for
the home buying process. FNCB can help you with your home financing
needs, whether you’re staying in town or relocating.
Benefits of Buying
Buying a home is a big decision. When making this leap, it’s good to
remember the benefits of this investment. If you're currently renting,
buying a home may have added tax benefits. Because your home builds
equity every month, you’ll save when you buy it, while you live in it,
and possibly make more money when you sell it.
FNCB can streamline the mortgage process. We offer
personalized service from a mortgage professional who can help you
determine the appropriate loan amount and program for you.
Costs of a Home
Do a little personal assessment before you walk out your front door.
Review your budget and factor in the costs of owning a home. Are
you able to maintain a home and make repairs as they are needed?
If you’re thinking of buying a larger home, are you factoring in larger
utility payments as well? Don’t forget to think about your down payment
and closing costs. Often, owning a home can be cheaper than renting and
with proper preparation, you'll be on your way to a stress-free
If you’re looking at getting a loan for your new home, you’ll want to
look at your credit. It might be a good idea to run a credit report on
yourself and do some credit clean up before you speak with a lender.
Cancel any credit cards that you don’t need or haven’t been using, check
to make sure that your payments are current, and correct any
If you haven’t already gotten a pre-approval letter, now is the best
time. FNCB can help you research mortgage options early so that you
won’t be scrambling once you find the home you want. Getting
pre-approved will let you know how much home you can afford, and it will
let sellers know that your offers are legitimate as well as serious.
Making an Offer
All your searching has paid off and you’ve found the home you want. But
before you start thinking of the perfect place to put your sofa, you
need to get your offer accepted. Knowing how much to offer may take some
thought since market conditions can affect sale prices. You or your real
estate professional will need to do a comparative market analysis on
recent home sales. You may be able to find the sales information online
through your county tax office or you may have to make a trip to the
courthouse. Real estate professionals have an advantage since most of
the sales information is recorded in the Multiple Listing Service for
your area. If you are working with a real estate professional, ask to
see the residential property disclosure on the home to find out:
- What’s the difference in asking price versus
selling price in recent sales?
- How long are the houses in the neighborhood
typically on the market?
- How long has the house you’re considering been
on the market?
- Has the price been reduced and by how much?
- Do you know of any prior offers on the home?
You need this information to make a reasonable offer.
Everybody wants to feel like they got a deal, but a seller may not take
a low offer seriously enough to counter. It’s not uncommon in some areas
for homes to sell well above the asking price. Be prepared to go back
and forth during the negotiation process until you agree upon a final
number. Verbal offers on real estate are generally not binding, so make
sure that all changes made to your purchase contract are in writing and
initialed by all parties.
Purpose of Earnest Money
You need to include an earnest money deposit to show “good faith” with
your offer and that you are serious about purchasing the home. The exact
amount is up to you and the seller, but usually is 1 to 4% of the offer
price. At closing, your earnest money deposit is applied toward the
purchase price or closing costs of the home.
Obtaining a Loan
In order to close the deal, you need to secure the necessary financing
for the home. Set up some time to get your personal papers in order:
- Current pay stubs, including year-to-date
- Current W-2 or tax returns, if self employed
- Bank account statements for three months
- Credit card information—lenders are looking to
see if your account is current, the number of open accounts,
outstanding balance and monthly minimum payments due
- Other loan information—car, existing mortgage,
student loans, home equity lines—the same guidelines apply as for
- Investment Information—include any account
numbers, current values, and three months of statements
As part of the application process, FNCB will require
that an appraisal of the subject property be performed to support the
collateral for your loan.
Closing on the Home
Keep your composure and look over your figures carefully. Your closing
agent will prepare a closing statement detailing all of the expenses for
the day of closing. Be sure that you know ahead of time how much money
you need for closing costs—the funds must be in the form of a certified
check or cashier's check. Plus, you’ll need to provide a copy of your
homeowner's insurance policy and evidence showing you’ve paid one year’s
worth of homeowner’s insurance.
Your closing agent will also ensure that the title to
your home is being transferred clear of any disputes, blemishes, or
liens. Ask for the receipts in case you should need to contact the
provider in the future. All that’s left is the exchange of keys and
you’re ready to move.
Financing your home requires thought, research and
planning. We offer several calculators that can help you determine which
type of mortgage may be right for you. By using these calculators, you
can research payment amount, mortgage programs, affordability and more.
US Department of Housing - Buying A Home