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Six Steps to Home Ownership

1. Study the Process

Buying a home should be fun. We at Phelps County Bank have created PCB's Six Steps to Home Ownership with the idea that if you are thoroughly informed, the process can be more enjoyable. We encourage you to take time to study the process and the market on your own.
First, get to know how the process works by studying the information provided on this website. Become familiar with the terms and requirements for purchasing a home as well as the current market trends.
Then, come to us. We will help you study your finances in depth. We can determine if you are prepared to purchase immediately, or we can set up a game plan so that you are ready to buy soon.
Finally, find a high quality real estate agent. Our area has many qualified agents to choose from-all eager to assist you in your search.

2. Prequalify

When deciding to purchase a new home, one of the first questions you need to ask yourself or your lender is, "How much can we afford to spend on a home purchase?" With many different home loans available, qualifying factors, and an ever-changing market-where to start can be confusing.
When you are considering a new home purchase, contact us first. We will sit down with you at your convenience and assist you in determining how much home you can afford. At no obligation to you, we will help you determine what price range of homes to look for. 
Once you are approved through our prequalification process, it easy simple to purchase and  negotiate the house of your dreams.

How Much Mortgage Can I Afford?

The steps below will help you determine your range for a conventional mortgage, depending on the amount you have as a down payment. 
We use two calculations to determine the maximum amount that your monthly housing costs and overall monthly obligations should be. They are your Monthly Housing Expense ratio and Monthly Overall Debt Expense Ratio. These ratios are only guidelines and may vary depending on the amount of down payment you have and type of mortgage selected. We also look at a number of other factors including credit and employment history. 
Calculate your monthly housing expense with this formula.

1. Add all sources of your gross monthly income
Borrower.............................................$ __________________
Co-Borrower.......................................+ __________________
Total: Line 1........................................$ __________________

2. Add all monthly payments
Auto Loan/Lease..................................$ __________________
Other installment payments with
more than 10 months remaining...........+ __________________
Revolving Charge Accounts...................+ __________________
Alimony/Child Support...........................+ __________________
Total: Line 2..........................................$ __________________

3. Tabulate Maximum Monthly Housing Expense
Enter Line 1 Total................................$ __________________
x .28
Total: Line 3........................................$ __________________
This is 28% of your gross monthly income. Line 3 is generally the maximum amount you should spend monthly for Principal, Interest, Taxes and Insurance (PITI), plus any applicable private mortgage, insurance premiums, homeowner association or condominium fees.

4. Tabulate Maximum Monthly Overall Debt Expense
Enter Line 1 Total..............................$ ___________________
x .36
Total: Line 4......................................$ ___________________
Your overall monthly debt, which includes your proposed housing expense and other monthly payments (Line 2), should generally not be more than 36% of your gross monthly income.

5. Tabulate Maximum Funds Available For Monthly
Housing Expense

Enter Line 4 Total...............................$ ___________________
Subtract Line 2 Total..........................- ___________________
Total: Line 5.......................................$ ___________________
Line 5 shows the maximum monthly funds available for your housing expense based on your current monthly payments to other sources (Line 2) and your gross monthly income (Line 1).

TIPS for Buyers with Limited Funds:
. Negotiate for seller paying of closing costs. FNMA guidelines permit the seller to pay up to 3% of the sales price under some conditions.
. Look for a zero point mortgage or lower point mortgage.
. Get a gift from a relative. For conventional financing anything above 5% may be gifted and for FHA financing all funds may come from gifts from blood relatives.
. Consider your assets.  The value of other assets may be utilized to obtain a down payment or pay for closing costs. 
. Consider FHA Financing which finances approximately 97.75% of the purchase price plus allowable closing costs.

3. Choose a Home

The best way to prepare for the home search is to be clear about your needs and wants before you look. Your final selection may require some compromise, but making decisions up front can save you considerable time. 
First of all, make a decision on the single-most-important factor-location. Next, decide if you want a new or an existing structure. Weigh the benefits of the latest in amenities, appliances and style against established neighborhoods. 
Finally narrow your search to homes with specific features. Take a look at our "Want List." Use this list-or create your own-to define your future home. Check one box behind each feature to designate it as a high, medium or low priority.

Home Viewing Notes
Date Seen_________________________
Address___________________________
Price____________Financing________
Association dues/fees_____________
Property taxes____________________
Size: House__________Lot__________
No. of rooms______________________
No. of Bedrooms______Baths________
Notes On:   Neighborhood_____________
__________________________________
__________________________________
School District:__________________
Exterior__________________________
__________________________________
__________________________________
Floor Plan________________________
__________________________________
__________________________________
Condition/Decor___________________
__________________________________
__________________________________
Special Features:_________________
__________________________________
__________________________________
Other Considerations:_____________
__________________________________
__________________________________
__________________________________

4. Apply for a Mortgage

If you have used PCB's prequalification process, a considerable amount of paperwork is already underway and you can basically move on to Step Five. If you haven't been prequalified, the following are the steps that you and your PCB Loan Officer will need to follow.
1. Meet with a PCB Loan Officer to complete a mortgage loan application or to receive advice to complete it on your own.
2. Collect information required such as W-2's and a copy of sales contract.  Your PCB Loan Officer will provide a list for you.
3. Your PCB Loan Officer is required to verify employment, deposits and other information.
4. For your protection, we will order an appraisal of the property to verify value.
5. Upon satisfactory completion of the above items, we will begin the settlement process.
6. SOLD!

5. Mortgage Approval

We will contact you as soon as your loan is approved. This is also a good time to go over the numbers one more time. Review the type of loan you have chosen and what your interest rate and loan payments will be.    
PCB offers many different types of loans than any local lender. Each has different requirements. Your PCB Loan Officer will have helped you determine the one that is best suited for you. 
Fixed Rate Mortgages are available with terms up to 30 years for as little as 5% down. Depending on the rate of interest you select, you may be able to obtain this loan with no points. 
Adjustable Rate Mortgages offer a flexible interest rate for up to 30 years. The variations in rate are based on an index and can result in a change in your monthly payment. PCB guards against unusual rate increases with an annual rate cap and a lifetime rate cap. 
FHA/VA Mortgages allow qualified buyers to buy a home over a term of up to 30 years with a small down payment. Closing can take place in as little as 30 days.
Construction loans from PCB are easily converted to fixed or adjustable mortgage loans upon completion of your home. If you keep your permanent loan with us, you will not pay any points. 
What will my monthly mortgage payment be? Your monthly payment is determined by how much you borrow, the term and the interest rate. 
The chart below provides a quick way to figure out your monthly mortgage payment. To use it, just read down the chart and find the rate of interest on your mortgage. Then read across the chart to find the length of your loan. Multiply that figure by the number of thousands of dollars you are borrowing. 
For example, if your mortgage is for $30,000, multiply by 30. The result will be your monthly payment for principal and interest. This does not include items such as taxes and insurance.

6. Settlement

Welcome to the end of the home buying process. Settlement is the formal process by which the title of real property passes from seller to buyer. Your PCB Loan Officer will provide you with a detailed booklet that will guide you through the settlement process. 
At the time of settlement, you are committing to complete the purchase of the property and may have made a partial payment-sometimes called earnest money-to the seller or their agent. Services may have been performed for which you are obligated to pay. These services-known as settlement costs or closing costs-are the costs of borrowing money, establishing the loan and preparing the necessary documents to finalize the sale. These costs may be significant, so be sure to include them in your budgeting. 
Your PCB Loan Officer will provide you with a detailed settlement cost booklet which offers specific numbers and examples. For now, some examples of these costs follow.
The costs of borrowing money include what some lenders call discount points. These are one-time charges to adjust the yield on the loan to what market conditions demand. Each point equals one percent of mortgage amount. For example, 2.5 points on a $100,000 mortgage would cost you $2,500 at closing. PCB offers many mortgage options that help you avoid discount points. 
The costs of establishing the loan might include the loan origination fee, appraisal fee, credit report, survey, and other services. Premiums for hazard and mortgage insurance are usually included at this time. And prepaid interest will sometimes be collected for the period between settlement and the end of the purchase month. 
The costs of document preparation include title cost which pays for the search of public records to determine if the property you want to purchase is free from any other ownership or liens. Under this category you would also find recording and transfer fees to cover the legal recording of the deed and transfer of taxes with the proper governmental agencies.

Discount Points
Cost of Points_________________
Loan Establishment
Loan Origination Fee___________
Appraisal Fee__________________
Credit Report__________________
Additional Loan Fees___________
Interest_______________________
Hazard Insurance_______________
Taxes__________________________
Assessments____________________
Other Fees_____________________
Document Preparation
Escrow, Closing Fee____________
Title Insurance________________
Notary Fee_____________________
Attorney's Fee____________
Recording Fees_________________
Tax Stamps_____________________
Other Fees_____________________
Additional Fees
Surveys________________________
Home Inspection________________
Home Warranty__________________
Other Fees_____________________
Total Settlement________________
Down Payment____________________
Total Estimated_________________