Home Loan Learning Center
We understand that buying a home is one of the most challenging, yet rewarding, decisions you will ever make. Because of this, we have provided you with some resources to help you through the process.
Preparing for Home Ownership
Advantages of buying a home
- A home is a primary means of building wealth.
- You may be able to deduct mortgage interest paid on your federal income tax return.*
- You accumulate equity, which is the value of your home after you subtract all mortgage debts.
- You recover any remaining equity if you sell the home.
- The equity built up in your home can be used as collateral.
- Once the mortgage loan has been paid, you have a substantial asset. Plus, your cost of living could drop dramatically.
- You can pass your home on to anyone you choose.
- You may be able to own a home with a monthly payment similar to your current monthly rent payment.
*Consult with your tax advisor regarding tax deductibility.
What home can you afford?
In addition to your mortgage payment, you need to consider the other costs associated with owning a home. To help get a better understanding of possible monthly payments, create a budget including the following:
- Property taxes
- Homeowners' insurance
- Maintenance or home improvements (for budgeting purposes, expect to spend around 1% of your home's value)
- Association fees (if applicable)
- Utilities (gas, water, electricity, phone, cable, etc.)
What to expect from the mortgage application process
- Loan Application
The mortgage loan application form asks for detailed information about you and the property you wish to buy, and requires documentation about your personal finances. The lender will examine this information, as well as your credit history.
- Locking in a Rate
Mortgage loan rates may change daily and sometimes, hourly depending on market fluctuations. Your SNB Mortgage Consultant will confirm your rate with you.
A borrower can pay points, a dollar amount based on a percentage of the loan amount, to the lender to reduce the interest rate on the loan. This requires additional costs up front, but you may realize savings in the long run by paying less interest. Speak with your SNB Mortgage Consultant to see if purchasing points is an option for you.
Your property will be appraised to determine its value. The appraiser will visit the house and will also consider sale prices of comparable houses.
- Down Payment
Lenders prefer that a borrower have 20% of the purchase price for the down payment. If you make a down payment of less than 20%, you generally have 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.
- Loan Review Process
After the appraisal, the loan file is submitted to the lender for your loan to be reviewed.
- Escrow and Title Preparation
A title company will hold the money and documents until all conditions of the mortgage approval are met. Title work will be prepared, including a title exam to ensure the title to the property is clear.
- Closing Costs
The costs associated with processing and closing a loan, such as application fees, points, title, insurance and credit processing. Your lender should provide you with a Good Faith Estimate, advising you of the estimated costs you may have to pay at loan closing. When budgeting for your new home purchase, be sure to factor in closing costs.
You will generally sign the documents in our offices. Funds such as any remaining down payment and closing costs will be due at this time. Closing costs normally include such items as appraisal fees, title exam, settlement fees, title insurance, credit report fees and application fees
- Title Transfer
When all funds are collected and the contract has been verified, the title is transferred and the purchase price funds are disbursed to the seller. After this step, you can take over the keys to your new home — Congratulations!
First time homebuyer program (NIFA)
If you have NOT owned a home in the past 3 years, the Nebraska Investment Finance Authority’s (NIFA) Single Family Homeownership Program provides affordable financing for low and moderate-income first-time buyers. Features of the Single Family Homeownership Program include:
- You must be a first-time buyer who has not held an ownership interest in your principal residence in the past three years.
- Generally, NIFA mortgage loans are offered at interest rates below market interest rates.
- Fixed term (not a variable rate) loan for the life of the loan.
- No pre-payment penalties.
- If you sell the home, your NIFA loan may (in some circumstances) be taken over by the buyer.
- Established purchase price of the home limits apply.
- You must live in the home.
- You must be 18 years or older.