Monthly Archives: October 2016

Key Mortgage Phrases Every New Homebuyer Should Know: Part 1

keys to new home on top of mortgage paperworkWe at Cornhusker Bank think that each homebuyer should be equipped with the proper tools needed when purchasing a home, and that starts with knowing the lingo. The mortgage and home buying process is filled with a lot of unfamiliar jargon and we hope to fix that. Whether you’re a first time homebuyer, or you are a home buying guru, here are some key terms we think every homebuyer should know:

Adjustable Rate Mortgage

An adjustable rate mortgage, commonly referred to as an ARM, is a loan type that allows the lender to adjust the interest rate during the term of the loan. Generally, these changes are determined by a margin and an index so that the interest rate changes, up or down, are based on market conditions at the time of the change. Most often these interest rate changes are limited by a rate change cap and a lifetime cap. If you apply for an adjustable rate mortgage, the lender is required to provide you with an ARM Program Disclosure which spells out the terms of the loan.

Appraisal

An analysis performed by a qualified individual to determine the estimated value of a home.

Assumable Mortgage

A loan that does not have to be paid in full if the home is sold. Instead, the new owner can take over payments on the existing loan and pay the seller the difference between the sales price and the balance on the loan.

Closing

A meeting of the parties involved in a real estate transaction to finalize the process. In the case of a purchase, a closing usually involves the seller, the buyer, the real estate broker and the lender. In the case of a refinance, the closing involves the borrower and the lender. Sometimes referred to as the settlement or the close of escrow.

Closing Costs

The total of all the items that must be paid at closing related to your new mortgage.

Credit History

A record of a person’s debt history, including all open and fully repaid obligations. A credit history helps a lender to determine whether a potential borrower has satisfactory history of repaying debts in a timely fashion.

Deed

The written instrument that conveys a property from the seller to the buyer. The deed is recorded at the local courthouse so that the transfer of ownership is part of the public record.

Escrow

Funds paid by one party to another to hold until a specific date when the funds are released to a designated individual. Generally, an escrow account refers to the funds a mortgagor pays to the lender along with their monthly principal and interest payments for the payment of real estate taxes and hazard insurance. This is also referred to as impounds. The money is held by the lender to make payments when they are due. An escrow can also refer to funds that are held by a third party to ensure the completion of repairs or improvements that must be completed on the property but that cannot be done prior to closing.

FICO® Score

A scoring model developed by the Fair Isaac Corporation generally used by lenders. This scoring system is based completely on information available in credit reports.

This will be a continuous series to keep you up to date on important mortgage phrases so continue to check back! For a more complete list of terms, check out our Glossary.

Benefits for First Time Homebuyers

shutterstock_207255709You’re looking to buy your very first home – congratulations! It’s a big step that can feel very exciting, yet also intimidating. Cornhusker Bank is here to help relieve some of that stress. A common question we get from first-time homebuyers is “What are the benefits of buying a home?”

No More Landlords

When you’re renting, you are at the mercy of your landlord to a certain degree. They own the property so they determine quite a few living regulations such as what pets you can have, if rent will increase year to year, or if you can nail a picture frame on the wall. When you own your home, you can be in the driver’s seat and make most of these decisions yourself. Get all the dogs and hang all the pictures you desire!

Mortgage Tax Deductions

A benefit you don’t get while renting is certain tax benefits. When you finance a home, you can often deduct the mortgage interest and property taxes on your income tax returns. Learn more about which types of loans are deductible, and always speak with a tax advisor to talk about your exact tax deduction options.

Saving Money on Monthly Payments

For some people, renting makes sense for a number of reasons; for location, lower responsibility and work level, or for monetary reasons. However, buying may help save you money in the long run. Instead of your monthly living payments going towards paying off someone else’s home or building, it will now go towards your own property! Also sometimes your monthly mortgage payment would actually be less than your rent payment, especially overtime. While buying isn’t right for everybody, it could be a good investment for you. You can even use one of our calculators to help figure out if you should rent or buy a home. It figures out all the fees, taxes, and monthly payments you would have to help you make the best financial decision.

If you’re thinking of buying your first home, there is a lot to consider. If you have questions about home loans and would like to speak to a mortgage specialist, feel free to contact Cornhusker Bank.

Welcome to Our Blog!

Cornhusker Bank is pleased to welcome you to our Home Loans blog. You’ll find tips and advice on mortgages and banking in general, as well as updates on the bank and events. Cornhusker Bank associates feel it is important to share insights and we love bringing you into the conversation. Our posts on this blog are an extension of our relationship with you, and we hope you find value here which proves our commitment to your success!