THE HOMEBUYING JOURNEY
First Merchants is here to help guide your journey to that new mortgage!
Step 1: Pre-Qualification
The first step to buying a home is figuring out how much you can afford. First Merchants’ Mortgage Loan Calculator is the perfect place to start. Our mortgage loan estimator breaks down your budget by reviewing your target home purchase price range, down payment, property taxes, homeowner’s association fees and home insurance, among other costs.
Before you start shopping around for a new home, we recommend obtaining a pre-qualification. A pre-qualification is a written letter indicating how much of a loan you may qualify for based on your credit history along with your stated assets and income. Getting pre-qualified not only indicates that you are a serious buyer, but it also helps you shop for homes that fit within your budget.
Step 2: Finding a Home
Once you’re pre-qualified and understand your budget, it’s time to start shopping for a home. Look for homes that fit your lifestyle and budget. Once you find your home, work with your real estate agent to negotiate the price and address any potential issues before you apply for a mortgage.
Step 3: Securing a Mortgage Loan
We recommend working with a mortgage loan officer (MLO) to secure financing for your home. An MLO will help you choose and apply for a mortgage that suits your needs.
Factors to consider when evaluating loans include:
Term length: Generally, mortgage durations range from 15 to 30 years. The length of your term determines how much you pay each month, as well as how much you pay in interest over the life of the loan. The primary differences between the two mortgage loans are that monthly payments for shorter term loans are significantly higher, because you’re paying off your debt in a shorter period of time. However, over the full life of the loan, borrowers will pay less with shorter term loans because the interest charged is lower.
Interest rates: Fixed and adjustable rate mortgages are the two most common types of mortgage loans. Deciding which type of mortgage to apply for depends on which best fits your needs.
- Fixed rate: For a fixed rate mortgage, the interest rate is generally set above market rates but remains consistent over the entire life of the loan.
- Adjustable rate: Adjustable interest rates can fluctuate over the length of the term, but the initial interest rate is set below the market rate. In other words, it can save you money in the short-term, but interest rates fluctuate and may increase over time, so it could cost you more in the long-term.
Step 4: Closing on Your New Home
Once you’ve applied for and secured a mortgage loan, you’re ready to close, which is also a process your MLO can assist with.
As part of the closing process, you’ll generally want to get a home inspection, which provides an in-depth examination of the home. Home inspections can reveal any underlying issues that you might want to address. Some prospective buyers negotiate with sellers by asking them to make repairs or replace major appliances before they finalize their purchase.
Before you move into your new home, you’ll also need to pay closing costs to finalize your purchase, which commonly include fees for appraisal, inspection, origination and title fees, among others.
For more information, call us at 1.800.205.3464 or contact us.