I really want to own my own home, but I'm not sure I can afford it. Where do I start?
For most people, home ownership is within reach. It likely will take some planning and saving on your part for the initial down payment, but for many, home ownership is as affordable as renting—in some cases even more so.
The best way to get started is to contact one of our experienced Residential Lenders. A lender can assist you in exploring all the options, understanding the lending programs available to you, especially if you’re a first-time buyer as there are special programs available for that situation. There’s no cost to talk to one of our lenders and we will not ask you to complete a loan application—it’s simply a conversation. It could be that you’re ready to move forward, but if not our experts can assist you in mapping out a plan to get you started on your way toward owning your own home!
How do I know how much house I can afford?
Well before you begin looking at possible homes, it’s best to get an idea of what you can afford. Keeping in mind you may be able to take advantage of special loan programs for first time buyers to purchase a home with a higher value.
If you'd like to know exactly how much you can afford, talk to one of our Residential Lenders. They’re here to assist you with exactly these kinds of questions. It’s free and there’s no expectation that you complete an application. As a community bank, we take great pride in providing you with information and assistance so you can reach your financial goals. We understand that buying a home may very well be the largest purchase you ever make—and we stand ready to be a resource for you throughout the process.
When should I talk with a lender?
The short answer is: when you start thinking about buying a home. It's true you can't actually apply for a mortgage until you've chosen your home and signed a contract to buy it. But talking with one of our residential lenders will assist you in knowing if you’re ready to apply for a loan now or if it serves to work on strengthening your financial position first. No one has perfect credit, so don’t be too hard on yourself.
Our lenders will work with you to determine how much house you can afford, explain the different types of loans available and point out special programs if you’re a Veteran or first-time home buyer. They may even be able to make suggestions that could make it easier to get the best mortgage for you.
Another advantage: you'll already have a good relationship with a lender when it comes time to apply for your mortgage.
Can I apply for a loan before I find the home I want to purchase?
Yes! Applying for a mortgage loan before you find a home is very common and often recommended by realtors so you know how much home you can afford before you start looking. If you apply for your mortgage now, we'll issue an approval subject to you finding the perfect home. You’ll also receive an approval letter which you can provide to your real estate agent and sellers so they know you are a qualified buyer. Having a approval for a mortgage may give more weight to any offer to purchase that you make.
When you find the perfect home, you'll simply call your Residential Lender to complete your application. This also speeds up the timeline from the time your offer is accepted on your dream home to the day you have the keys in your hands!
What do I need to know about the kinds of mortgages available? Aren't they either fixed and adjustable rate?
Yes, all mortgages fall into one of these two categories. The interest rate you pay is either the same (fixed) for the life of the mortgage, or it can change (adjust) over the life of the mortgage.
How do I know which type of mortgage is best for me?
- Fixed-Rate Mortgages With this loan your monthly payments for interest and principal never change over the life of the loan. If you choose to roll your property taxes and home insurance into your payment, know that those types of expenses may increase, but generally your monthly payments will be very stable. Fixed-rate mortgages are most commonly in 30- and 15-year terms; although 20-year and 10-year terms may be available.
- Adjustable-Rate Mortgages (ARMS) This type of loan generally begins with an interest rate that is below a comparable fixed rate mortgage, and then the interest rate changes at specified intervals ( for example, a 5/1 ARM is fixed for five years and then can adjust annually after that initial term) depending on changing market conditions. It’s important to know that if interest rates go up, your monthly mortgage payment will go up, too. However, if rates go down, your mortgage payment will drop also.
There isn't a single, simple answer to this question. The right type of mortgage for you depends on many different factors, including:
For example, a 15-year fixed-rate mortgage can save you many thousands of dollars in interest payments over the life of the loan, but your monthly payments will be higher. An adjustable rate mortgage may provide a lower monthly payment than a fixed-rate mortgage, but your payments could increase when the interest rate changes.
- Your current financial picture;
- How/If you expect your finances to change over time;
- How long you intend to keep your house;
- And how comfortable you are with your mortgage payment changing from time to time.
To find the “right” answer for you, contact one of our knowledgeable Residential Lenders to discuss your preferences and financial goals.
Can I save money by choosing a 15-year loan rather than a 30-year loan?
A 15-year fixed rate mortgage gives you the ability to own your home free and clear in 15 years. And, while the monthly payments are somewhat higher than a 30-year loan, the interest rate on the 15-year mortgage is usually a little lower, and more important—you'll pay less than half the total interest cost of the traditional 30-year mortgage. However, if you can't afford the higher monthly payment of a 15-year mortgage don't feel alone. Many borrowers find the higher payment out of reach and choose a 30-year mortgage. It still makes sense to use a 30-year mortgage for most people.
Ultimately, each homeowner chooses the term that works best for their circumstances and long-term financial goals. If you’re unsure which to choose, your Residential Lender will be happy to create a Good Faith Estimate specific to your situation so you may compare the two.
- Who Should Consider a 15-Year Mortgage?
The 15-year fixed rate mortgage is most popular among younger homebuyers with sufficient income to meet the higher monthly payments to pay off the house before their children start college. They own more of their home faster with this kind of mortgage, and can then begin to consider the cost of higher education for their children without having a mortgage payment to make as well. Other homebuyers, who are more established in their careers, have higher incomes and whose desire is to own their homes before they retire, may also prefer this mortgage.
- Advantages and Disadvantages of a 15-Year Mortgage
The 15-year fixed rate mortgage offers two big advantages for most borrowers:
You own your home in half the time it would take with a traditional 30-year mortgage.
- You save more than half the amount of interest of a 30-year mortgage. Lenders usually offer this mortgage at a slightly lower interest rate than with 30-year loans—typically up to 0.50% lower. It is this lower interest rate added to the shorter loan life that creates real savings for 15-year fixed rate borrowers.
- The possible disadvantages associated with a 15-year fixed rate mortgage are:
- The monthly payments for this type of loan are roughly 10 percent to 15 percent higher per month than the payment for a 30-year.
- Because you'll pay less total interest on the 15-year fixed rate mortgage, you won't have the maximum mortgage interest tax deduction possible.
Can I lock in my interest rate so I’m sure to get the rate I was quoted?
Yes. You may lock in your interest rate as soon as your loan is approved and you pay the application deposit to cover the cost of your appraisal. The application deposit is simply the appraisal cost estimate and will be credited to the actual appraisal cost at your closing.
What should I know before I make the decision to lock in my rate?
The interest rate market is subject to movements without advance notice. Locking in a rate protects you from the time that your lock is confirmed to the day that your lock period expires.
When you elect to lock your rate, it creates a binding agreement between you, the borrower, and the us, your lender. This agreement specifies the number of days for which a loan’s interest rate and discount points, if applicable, are guaranteed. Should interest rates rise during that period, we are obligated to honor the committed rate. Should interest rates fall during that period, the borrower must honor the lock.
Why do home loan applications ask so much detailed information?
- When Can I Lock?
You may lock in your interest rate as soon as your loan is approved and you pay the application deposit to cover the cost of your appraisal.
We do not charge a fee for locking in your interest rate. We do require borrowers to pay the estimated cost of the home appraisal at that time and it is credited to the actual appraisal cost at your closing.
- Lock Period
We currently offer 25, 40 and 55 day lock-in periods. This means your loan must close and disburse within this number of days from the day your lock is confirmed by us.
- Confirmation of the Lock
Upon locking your loan you’ll receive new documentation, including an updated Good Faith Estimate, confirming your lock rate, expiration time and if you elected to include discount points in your loan.
Home loans focus on just three things: your employment and finances, as well as details about the home you want to buy. Buying a home is likely to be the largest single purchase you make, and one that is very important to you. We want to be sure to give you a quick, yet thoughtful answer based on the facts. After all, we’re in the business of loaning money, not rejecting applications, so we want to do all we can to assist you in realizing your dream of owning a home.
We can make the best decision if you provide adequate details–this also ensures your application process goes smoothly. We’re happy to share a list of what information you'll need to complete your application; just ask any of our Residential Lenders for assistance.
How much will I need for the down payment?
It may be less than you think. Many first-time buyers are surprised to learn there's no set answer to this question. Generally speaking, your down payment can be anywhere from 3.5% to 20% of the home's value. Down payments can be lower for some special, first-time buyer loans, and veterans or those on active military service can obtain loans with no down payment at all.
What does my mortgage payment include?
For most homeowners, the monthly mortgage payments include three separate parts: a payment on the principal of the loan (the amount borrowed); a payment on the interest; and payments into a special account, called an escrow account, that your lender maintains to pay for things like hazard insurance and property taxes.
Is there a prepayment penalty with any AmericanWest Bank mortgages?
No. You may pay off your mortgage at any time with no additional charges.
How long will it take to know if we’re approved for our home loan? What does the application process entail?
Once you complete your loan and submit it to us, our job is to verify all the information you've provided. At AmericanWest Bank, our application review process is considered one of the fastest, with most answers coming in as little as 24 hours and fully completing the loan process in a few as 14 days. The timeline may vary, depending on the type of mortgage you choose, if any information was missing on your application and other factors.
Within three business days after you make application, we will provide you with a written estimate of your closing costs—called a Good Faith Estimate. In it will be a clear and detailed list of any costs (e.g. home appraisal fee, flood certification fee, credit report fee, pre-paid items such as taxes and insurance, the origination fee, well as your estimated monthly payment, the cost of your finance charges, and other facts. This is the time to carefully review the facts and decide if you want to go forward—think of it as a check point to be sure you have all the information you need or if you have additional questions for your Residential Lending officer. You get the final say: We’ll ask you to sign this document, confirming you want to proceed with the loan application.
To ensure the process moves along as quickly as possible, stay in touch with your lender and be available to answer questions that might come up. We also offer a list of best-practices to ensure your application doesn’t becoming stalled in the process.
Once the application process is complete we’ll notify you that it’s time to close on your loan, which is when we hand off your final loan documents to a title company for the final step before your loan funds. If you have questions about what to expect at closing, we invite you to ask your residential lender as they’re well versed in the process and want to be of assistance to you.