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Notes from the Nest

Your Guide to Home Buying Part Two

Thinking about buying a home? Feeling overwhelmed with questions? Let us help you! In Part Two of a special Notes from the Nest three part series, we'll tell you just what you need to consider during the buying process.

lender can help you determine the price range of a property you can afford and what loan program will best suit your needs.  Affordability is determined by comparing your gross income (income before taxes and deductions are taken out) and your current monthly loan and credit card payments (ie: car payment, student loan, credit card payment, etc).  General guidelines will allow 30% of your gross income to be used for your housing expenses (including taxes and insurance) and 40% for your total debt (housing expense and other payments). Here are a few options:

Conventional Loan

  • 5% miminum down payment. Less than 20% down requitres PMI (Private Mortgage Insurance). A down payment exceeding 20% eliminates the need for PMI.
  • Available loan terms are 15 years, 20 years and 30 years with the interest rate locked in for the entire term.
  • Closing costs are about $1,200.

USDA Loan

  • Property must be in a qualified community.
  • Income limits apply.
  • No down payment required.
  • 2% upfront fee that will be added into your loan.
  • A small monthly fee to USDA for utilizing their program.
  • 30 year loans with the interest rate locked in for the entire term.
  • Closing costs are about $1,200.

WHEDA Loan

  • Income limits apply.
  • 3% down payment required. However, loans are available for down payment and closing cost assistance.
  • You can obtain a loan with PMI or without PMI for slightly higher interest rate.
  • 30 year loan with the interest rate locked in for the entire term. The down payment assistance loan will be a 10 year loan again with the interest rate locked in for the entire time.
  • You can also obtain a loan for up to $10,000 for minor improvements to the home.
  • Closing costs are about $1,500.

 

Watch for the next installment of our Notes from the Nest to learn what steps to consider after purchasing your home.  And for more information about buying your future home, talk to a Horicon Bank Consumer Banking Officer today!