Hints for Homebuyers

Buying a home? Keep these tips in mind so the process goes smoother.

If you have questions about the homebuying process, please visit one of our branches in West Virginia, Virginia, North Carolina, or Tennessee to connect with a member of our mortgage team. We're here to help!

4 Crucial Topics to Consider

1. Ensure Your Commitment to a Mortgage

As a first-time buyer, it's important to take a close look at your financial situation and decide if you're ready to take on mortgage payments. While mortgage terms often extend over 15 or 30 years, even if you don't anticipate staying in your home for that duration, buying a house remains a substantial commitment.

Begin by addressing key questions:

• Am I prepared to commit to this home and city for at least five years?
• Do I have an emergency fund capable of covering at least three months of expenses?
• Is my income stable?

If you answer "no" to any of these, you might want to delay your home purchase.  It's also important to consider any upcoming events that might impact your location, income or expenses.

2. Emphasize Mortgage Preapproval

Resist the temptation to dive headfirst into house hunting, especially if you're a first-time buyer or in a hurry to leave your current living situation. Make it a priority to get a mortgage preapproval before looking at properties so you know how much you can borrow and set a budget. 

There's a difference between prequalification and preapproval:

• Prequalification letter: An estimate based on an informal assessment of your income and other information.
• Preapproval letter: An official document from a lender detailing the precise loan amount you qualify for based on financial data like W-2s, bank statements, and credit score.

Benefits of preapproval include:

• Clear understanding of your affordable home range to help you stay in your budget
• Increased offer strength, reassuring sellers of your financial capacity to purchase the home
• Reduced likelihood of last-minute surprises or delays in the mortgage approval process

3. Safeguard Your Credit

Avoid opening new lines of credit, such as credit cards or personal loans, as you approach the homebuying process. During the mortgage preapproval process, lenders scrutinize your credit report, and any new debt or adverse credit changes can jeopardize final approval.

Also, make sure you continue to pay bills on time. Consistency and reliability in financial behavior are key factors. 

4. Know Your Home Loan Options

First Community Bank offers several types of mortgages: 

• Conventional loans: Common and flexible, often requiring as little as a 3% down payment.
• FHA loans: Suitable for those with less strict financial and credit score criteria, offering a 3.5% down payment option with a credit score as low as 580.
• USDA loans: Designed for rural or suburban homebuyers, offering a 0% down payment option, subject to income restrictions.
• VA loans: Exclusively for veterans, active-duty military, National Guard members and eligible spouses, with 0% down payment.

Understanding Closing Costs

Home closing costs refer to the various fees and expenses that homebuyers and sellers incur during a real estate transaction. The specific costs can vary depending on factors like location, the purchase price of the home, the terms of the mortgage and more. Some costs may be negotiated between the buyer and the seller. Additionally, the buyer typically pays most of the closing costs, but this can be influenced by local customs, the real estate market and the terms of the purchase agreement.

Here is a general list of items that may be included in home closing costs:

1. Loan-related Costs:

• Loan origination fee
• Application fee
• Appraisal fee
• Credit report fee
• Points (optional, representing interest paid in advance)

2. Title and Escrow Fees:

• Title insurance (both lender's and owner's policies)
• Title search and examination fees
• Escrow or closing agent fees

3. Government Fees:

• Recording fees
• Transfer taxes
• Property taxes (prorated between buyer and seller)

4. Prepaid Expenses:

• Prepaid interest
• Homeowners insurance premiums
• Property taxes (prepaid portion for the upcoming year)

5. Homeowners Association (HOA) Fees:

• Transfer fees
• Dues or assessments (if applicable)

6. Home Inspection and Survey Fees:

• Home inspection fee
• Survey fee

7. Attorney Fees:

• Legal fees for document preparation and review

8. Miscellaneous Costs:

• Pest inspection
• Courier fees
• Notary fees

To get a more accurate estimate of your closing costs, request a Loan Estimate (LE) from your lender, which provides a detailed breakdown of the expected closing costs.