Author: Joel Kohl, VP/Loan Officer, NMLS #1496495

Purchasing a house requires careful planning and financial assessment.

Before you buy a house, we recommend that you talk with a loan officer as far in advance of the purchase as possible. They will be able to guide you through the home-buying process, so you know exactly what to do before making one of your biggest financial investments. Here are some important steps and factors to consider:

• Check your credit score. Your credit score impacts loan eligibility and interest rate. Higher credit scores typically secure better loan interest rates. You can obtain your credit score for free through services like annualcreditreport.com. Knowing your credit score and the information included on your credit report in advance can give you time to fix any errors or derogatory information.
• Create a budget. List all monthly gross income (before taxes) and expenses. Use the 28/36 rule; housing costs should not exceed 28% of your gross income and total debt payments should stay below 36%. This is a good guide to keep you on budget to purchase a home.
• Save for a down payment and closing costs. Try to save up as much as possible for a down payment. Some loans require as little as 3% down but then require you to pay private mortgage insurance along with your regular monthly loan payment. You can avoid paying private mortgage insurance by putting 20% down toward the purchase of a home. Learn more about private mortgage insurance here.
• Know your debt. Many lenders use a debt-to-income ratio to qualify you for a home purchase. The debt-to-income ratio is calculated by dividing your total debt payments by your gross income. PremierBank has easy-to-use online calculators that are an excellent resource in tabulating your future monthly mortgage payment to understand how much you’ll need for a downpayment. Access these calculators anytime here.
• Get pre-qualified. Talk with your loan officer to determine what type of loan works best for you. They will go through the initial application, obtain your credit report, and present all the different options to you.
• Research the housing market. Look for areas with home prices in your price range while considering work commute time, schools, or other amenities that are important to you. Working with an experienced and licensed real estate agent can help with the search.

Once you’re ready to make an offer, a real estate agent can help with submitting and negotiating the contract. Then, when the offer has been accepted, your loan officer will get to work on securing your loan and finalizing the purchase!

Whether you are in the market to purchase a new house, or need financing for renovations, PremierBank has flexible loan options to meet your needs. To learn more about our home loan programs, click here.