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Helpful information from Liberty Savings Bank
Ready to buy your first home? Follow our step-by-step guide to make sure you're as prepared as possible for the home-buying process, including securing your first mortgage.
Explore our roadmap, financing guide, mortgage calculators, and additional resources. When you're ready, a Mortgage Loan Specialist is ready to help answer any questions about how you get started on buying your first home like a pro.
Liberty works hard to make sure the buying or refinancing process is as comfortable as possible for the customer. If you are qualified and are looking to buy a home, Liberty will get you the pre-approval letter that you need to begin the home buying process. For those looking to refinance, Liberty can take you through the loan approval process and determine which refinancing option makes the most sense for you.
Liberty will be working hand in hand with you from pre-approval to loan closing. Whether refinancing or purchasing, we can help you find the loan that works best for you.
Situations change all the time, so why should you be locked into a set mortgage forever? At Liberty, we want to help put you in the best position possible. Refinancing allows you to change the terms and rates of your loan or get cash when you need it. Two types of refinancing to consider are rate-and-term refinance and cash-out refinance.
A rate-and-term refinance is a common refinancing option when interest rates go down. Borrowers take advantage of this by refinancing and having lower interest rates. You may also change the term in order to pay off your mortgage sooner which allows you to save significantly on interest payments.
A cash-out refinance gives borrowers the option to convert home equity into cash. A new, larger mortgage is created and allows the borrower to get the difference between the two loans in cash. Many borrowers use this to consolidate debt, improve your home, pay for tuition, etc.
After you’ve applied for a mortgage, here’s a few things to expect
Technically no, thanks to the Dodd-Frank Wall Street Reform, but after the crash of 2008, lenders are much more cautious about giving loans to low scores. So if you have a low score, you can still get a loan, but it’s going to cost you a lot more than someone with a good or excellent score. Below is a list of minimum FICO scores by mortgage type:
Fixed rate loans have an interest rate that is set when you take out your loan, and it won’t change over time. Whereas an adjustable rate mortgage (ARM) has an interest rate that can change up or down over time. ARMs tend to start at lower interest rates than fixed rate mortgages, however, once their introductory period is over, their payments will most likely rise. Fixed rates are recommended if you’re planning on staying in your home long term, and don’t see yourself moving for at least 5 years.
Here are some of the different mortgage options available.
A mortgage that will be paid off in 15 years vs. 30 years. A 30 year loan offers lower monthly payments, but more commitment, meaning owing the bank thousands more in interest. 15 year loans offer higher monthly payments, but you’ll pay off your principal faster and have a lot less interest to pay off over time.
Prequalifications and Preapprovals are similar to each other. These provide a glimpse of a loan amount you may be approved for in order for you to shop for an appropriate value home. Prequalifications and Preapprovals are only available to you if you are purchasing a home. They are based on the information you provide and are not a loan approval.
Here are seven of the most important financial benefits to buying a house.
There are a lot of factors to consider before owning your first home. If you answer “No” to any of the following questions, you may need to consider whether you’re financially ready to buy a house or not.
There’s a lot that goes into buying a house. If you’re looking to start the process, here’s some helpful steps to get the ball rolling.
Essentially, your loan needs to pass through a lot of hands before it can be approved. There are many rules, regulations, signatures, underwriters, hoops, and requirements you need to pass through in order to close your mortgage. Yes, it’s a pain, but it’s worth it. So take a breath and be patient, it will get done.
PAYMENT / AMORTIZATION CALCULATOR
Calculate your monthly payment and see how the principal is paid over time. GET STARTED
PREPAYMENT SAVINGS CALCULATOR
Find out how soon you can pay off your mortgage by making a prepayment. GET STARTED
RENT VS OWN CALCULATOR
Calculate the difference between renting and buying a home.
GET STARTED
EARLY PAYOFF CALCULATOR
Determine the additional monthly payment amount needed to pay off the loan sooner. GET STARTED
ANNUAL PERCENTAGE RATE CALCULATOR
Calculate the APR for fixed-rate or adjustable-rate loans.
GET STARTED
REFINANCE BREAK-EVEN POINT CALCULATOR
Find out how long it will take to “break-even” on a refinanced loan. GET STARTED
DEBT CONSOLIDATION CALCULATOR
Determine if you can consolidate your debt by combining it with your home mortgage. GET STARTED
TAX SAVINGS CALCULATOR
Determine the estimated tax savings with a new loan.
GET STARTED
When it comes to mortgages, there are many perplexing terms and abbreviations that can confuse people simply trying to buy their first home. Here is a list of some of those terms that you may not be familiar with but will need to be when buying a home.
An adjustable mortgage loan is a fixed rate for the first few years then it can change every 12 months after that over the course of the loan. Your principal and interest payment can also vary as the rate changes.
Closing costs are expenses associated with completing the purchase of the house.
The down payment is the initial payment the borrower puts toward the house.
Equity is the difference between the value of the home and the mortgage loan. This typically increases over time as the amount of the loan decreases.
Equity is the difference between the value of the home and the mortgage loan. This typically increases over time as the amount of the loan decreases.
FICO is the major credit scoring model used to assess the risk of the borrower.
A Fixed Rate Mortgage will have the same interest rate every month meaning your principal and interest payment will never vary.
Interest rate is the annual percentage of the loan that is charged to the borrower.
A jumbo loan is a loan of more than $484,350.
The LTV Ratio is the amount loaned for a mortgage divided by the value of the home.
Pre-approval is the lender telling the borrower how much money they may borrow and under what terms.
Principal is the amount of money borrowed for the mortgage. This decreases as payments are made.
Refinancing is contractually changing the terms and rates of your mortgage loan.
Reserves are the amount of liquid assets a borrower has on-hand after paying the down payment and closing costs
Risk is the likelihood of the borrower being able to make timely payments on the loan.
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APY= Annual Percentage Yield