Buying A Home
Mortgage Tips for First-Time Home Buyers
As a mortgage lender, Mid American will take into account your credit history, your income and your down payment when calculating your home loan.
Should I get pre-approved for a mortgage?
What can I afford?
Most financial experts recommend that your mortgage payment — which includes principal, interest, real estate taxes and homeowners insurance — not exceed 28 percent of your gross (pretax) income. As an example, to determine your monthly mortgage payment if you earn $50,000 in gross income a year, multiply that by .28, then divide by 12 months to get approximately $1,166.
When committing to a long-term home mortgage, you also should consider what financial changes might occur during your future as well, such as a change in employment or financial status or even the addition of children.
What are closing costs?
Closing costs cover practically every expense associated with your home loan, ranging from points, taxes, title insurance, document preparation and processing appraisals, financing costs to items that must be prepaid or escrowed. In Kansas, the closing costs are usually 2-4% of the property value. To help members determine what closing costs will be, Mid American provides a good faith estimate.
What about a down payment?
For many new homeowners, the down payment — which can range from 0-20% and depends on the type of mortgage — is often one of the most significant hurdles to home ownership. If a home is in your future, start a savings account and starting depositing money from each paycheck and from unexpected financial windfalls, such as a large garage sale or gift money.
For first-time homebuyers, there are a number of down payment assistance programs at the federal and local levels. The U.S. Department of Housing and Urban Development lists statewide and regional programs in Kansas at this link: http://www.hud.gov/local/ks/homeownership/buyingprgms.cfm
What are points?
Consider points when comparing mortgages. Points are a one-time fee and are paid up front to obtain a lower interest rate on your mortgage. One point equals 1% of the loan amount and can lower your interest rate by approximately 0.25%. If you intend to live in your house for a long time, you may want to consider paying points. Otherwise, the cost you pay up front may exceed the benefit.
Should I get pre-approved for a mortgage?
Getting pre-approved has many advantages. Getting pre-qualified or pre-approved lets the home seller know you can afford the house and helps speed up closing. Mid American’s home loan department will review an individual’s credit history, earnings information, employment history and assets during the pre-approval process.
Other resources
Many resources are available for more information on home ownership and mortgages. Both the Freddie Mac and Fannie Mae Web sites have online tutorials that walk you through the process. Debbie Stang, Mid American’s mortgage loan officer, has nearly two decades’ experience in financial institutions in customer service, management and lending. She can be reached at 722-3921, ext. 250, or at
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