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Homebuyer's Guide

Buying a home is the largest investment most people will make in their lives. It is an exciting and exhilarating experience, especially if you have experts to help you along the way. Here are a few things you'll need to know.

STEP 1: Decisions, Decisions

The first step in the home-buying process is making some key decisions. Answering important questions early, like how much home you can afford, what type of home you want to buy and other key considerations, will help keep the process smooth later on.

Home Buyer's Guide from Bank of England Mortgage Jake Ott On the journey to homeownership, this helpful guide will serve as your roadmap with information to make you feel confident and assured in your decisions. And if you ever find yourself feeling lost, we're here to offer further guidance.

The home-buying process begins with some key considerations that will ensure that you start this journey on the right foot.

Are you sure that buying is the best option?

While buying a home may seem like it is always the right decision, it might not necessarily be the case for everyone. For some, renting is the more prudent option. Once you compare buying vs. renting, you are ready to make the best decision for your current situation.

How much home can you afford?

Once you have decided that purchasing a home is right for you, you’ll next want to think about how much home you want to own. Knowing what you can afford in a home will help focus your search. How much space will you need? How much space can you afford? Answering these questions honestly will help you find the right home for your needs.

What type of home do you want to own?

Now that you know what you can afford, you can determine what type of home best fits your needs. Consider the differences between a single-family home, a condo and other housing options. This will help save you time and frustration in your search.

Ask the Experts

The home-buying process is a major investment of both time and money. Working with the right loan professionals will make the process infinitely easier on your peace of mind and your bottom line. The key is to put together a team that you trust who will have your best interests at heart.

STEP 2: Time to get started

Home Buyer's Guide from Bank of England Mortgage Jake Ott You have decided that you are ready to begin your home-buying journey. There are a few steps to take that will ensure that you will be getting the right mortgage to fit your needs.

You've done your homework and reached the informed decision that buying a home is the right choice for you. You know how much you can afford and have even narrowed down what type of home you want to buy. Now it is time to start the mortgage process. We're on your team to help guide you.

Build Your Budget

Having a set budget is key. Answering a few questions before you begin looking will help you find the best loan option to fit your budget. Do you have a down payment? What is your income-to-debt ratio? What is your credit score? These basic answers will go a long way to making informed decisions. You can find more about budgeting for a home here.

Plan Your Payments

You will need to figure out your monthly payments and how much you can comfortably afford. Your monthly mortgage payment consists of Principal, Interest, Taxes and Insurance, also known as PITI.

  • The initial amount you borrow to purchase the home and the remaining outstanding balance throughout the life of the loan is the PRINCIPAL.
  • The charge for borrowing the money is the INTEREST.
  • TAXES are assessed by your local government and typically paid to your lender as a portion of your payment and collected in an escrow account. The lender will then pay them to the government upon their due date.
  • Established in a similar fashion as your taxes, INSURANCE is collected by the lender and also put into an escrow account. Your insurance comprises two prominent types of coverage. Homeowner’s insurance provides you with coverage for damages inflicted by hazards such as (but not limited to) wind and fire. Mortgage insurance typically is required for those making a smaller down payment on their loan; it provides protection for your lender in the instance that you are not able to fulfill the mortgage requirements and repay your loan.

Take Interest in Your Rate

One of the biggest concerns for homeowners is their mortgage interest rate. That’s because it directly affects the monthly payments for the life of the loan. Because of this, home buyers search for steps they can take to obtain the lowest rate available.

STEP 3: Prequalification

Getting prequalified for a home loan is a great way to guide you on your home search. What is prequalification? What are the benefits? Is it right for you? We can help you answer all of these questions and others.

Getting prequalified for a loan before you start looking serves as the best roadmap for your home-buying journey.

What is Prequalification?

Home Buyer's Guide from Bank of England Mortgage Jake Ott Prequalification is an estimate of what you might be able to borrow. You will provide your lender with information about your income and assets, and sometimes will submit to a credit check. Your lender then gives you an estimate of your loan amount and loan program.

How Does Getting Prequalified Benefit You?

  • You will be able to shop with the confidence of knowing your exact price range.
  • You can identify credit problems that can be addressed early in the lending process.
  • You will typically have more negotiating power, as some sellers see more strength in offers from prequalified buyers.
  • If you are self-employed or a commission-based buyer, prequalification can demonstrate financial backing if your income fluctuates more than those of salaried buyers.
  • Prequalification gives first-time homebuyers the advantage of equalizing their offer with similar offers made by previous homeowners.

Other Prequalification Facts

Prequalification is offered by most lenders at no cost.The process is not comprehensive and therefore is not guaranteed, nor is it considered any type of loan commitment. It simply shows that you’ve approached a lender who was serious about helping you determine what you can afford and will walk you through the process. A prequalification is not an approval of credit, and does not signify that underwriting requirements have been met.

STEP 4: Start Your Search

Home Buyer's Guide from Bank of England Mortgage Jake Ott Once you have been prequalified for a home loan, you have a great idea how much home you can afford. In other words, you have the boundaries you need to begin house hunting.

Before you start looking at houses, make a wish list for the qualities you are looking for. If you choose to work with a licensed real estate professional, this will help narrow your search.

Type of Neighborhood

Finding the right neighborhood is often just as important as finding the right house. When considering a neighborhood, ask yourself some key questions. Is it near your office and areas of the city that are important to you and your family? Is it in the school district you desire for your children? Does the neighborhood appear to be a good fit for you and your family today and tomorrow?

Type of Home

There are several types of homes out there, each one providing different options in terms of space, responsibilities, upkeep and ownership. Consider all the differing factors that would make a single-family home, a condominium or a townhome the best choice for you.

Type of Features

What do you need in a home and what do you want in a home? Would you like a one-story or two-story home? How many bedrooms and bathrooms would you need? Would you like a home office? What type of backyard would you like? Consider all the different aspects and prioritize the features of the home you’d like to have.

STEP 5: The Process

Home Buyer's Guide from Bank of England Mortgage Jake Ott You’ve found your dream home. What comes next? We can let you know what to expect when it comes to actually buying a home, from extending an offer through closing. Our experts are always here to be your guide.

Extending an Offer

Purchasing a home is a transaction that involves heavy negotiations. A real estate professional can be a valuable resource to have on your side as you determine the appropriate initial offer to extend. During this part of the process, you’ll want to consider the following:

To add extra weight to your offer, you’ll want to provide the prequalification letter from your loan officer. Sellers obviously prefer an offer with financial security.

Make sure all of your negotiations are in writing. This will provide a record of deals and decisions made as well as help avoid any misunderstandings.

You’ll want to have earnest or “good faith” money ready for a deposit. While the amount varies depending on your location, all of it will be placed into an escrow account until the purchase transaction is complete.


Once the seller has accepted your offer, here’s what you’ll need now that you’re in the final stretch:

  • Review the loan commitment with your loan officer and be sure you understand your loan’s rate terms and any additional requirements or details.
  • Obtain homeowner’s insurance and, if required, flood insurance.
  • Using your loan commitment and purchase agreement as guides, set a closing date and time.
  • Verify with the closing agent or attorney that a property survey was ordered.
  • Prepare to move by making a checklist of necessary actions and setting timelines.
  • Do a final inspection of the home you are about to purchase.
  • Confirm that you have met all the guidelines and conditions in the purchase agreement established by the seller. The purchase agreement is detailed below.
  • Bring the total you owe in closing costs in the form of a certified or cashier’s check to your closing appointment. Typically, personal checks and/or cash are not accepted.

The Purchase Agreement

Money has now officially changed hands, and you’re getting closer to the end. You will now need to finalize the purchase agreement, a legally binding contract between the buyer and the seller of the property that outlines all terms and features of the final transaction. This can include:

  • The property address and legal description.
  • The sales price and the loan, down payment and deposit amounts.
  • The names of all parties involved including the buyer, seller, buyer’s agent, seller’s agent, mortgage broker/banker and any attorneys.
  • Time limits that might apply to the transaction.
  • Any contingencies that must be addressed prior to the deal being complete and finalized such as the sale of the buyer’s present home, issues from the home inspection that might need to be repaired, etc.

Because every home transaction is different, these contracts are not exactly uniform. A real estate professional, a title company or an attorney may assist in the negotiations and execution of a purchase contract; this is dependent on the state in which the transaction is being conducted.