Buying a home is likely the most important purchasing decision you’ll make during your lifetime. Whether you’re in the market for your first house or wish to refinance your current mortgage, it’s important that you have as much information as possible.
Kerndt Brothers Bank has been lending money to our clients for more than 150 years. As your trusted community bank, we live and work in the same towns as you, our customers. We’re committed to providing only the fairest and most affordable mortgages available.
Over the years, we’ve seen a lot of changes in the home loan industry.
After the freewheeling and free dealing mortgage lending days of the 2000’s, banks and lenders became much more cautious about financing. In today’s more conservative lending climate, there are several types of mortgages available: conventional fixed-rate loans, balloon mortgages and first time home buyer mortgages.
Let’s take a quick look at the pros and cons of each type of financing.
Fixed-rate home loans are just that, fixed. Once you lock in a rate, your interest rate stays the same for the remainder of your payment schedule. It is a secure, dependable type of loan. If you plan to stay in your home for more than 10 years, this type of loan makes a lot of sense. Depending on your monthly budget, you can choose from 15, 20, or 30 year mortgages. If interest rates fall—unless you refinance your loan—you’ll continue paying the higher fixed interest rate.
An important rule of thumb: The longer the length of your mortgage, the lower your monthly payments. However, if you take 30 years to pay off your home, you’ll pay more over the long haul. If you have the financial resources to do so, you may opt for a 15-year loan, pay more each month, and pay off your house earlier. The personal bankers at Kerndt Brothers Bank will sit down with you to determine the best fixed-rate home loan for you, your lifestyle, and your goals.
Not all properties or applicants will qualify for or want a conventional fixed rate mortgage. In that instance, we also offer an in-house Balloon Mortgage. This product offers more flexibility for non-conforming property types such as acreages, hobby farms and investment properties. The rate is fixed for up to five years and payments amortized up to 30 years for a lower monthly payment. At the end of the fixed rate time period a “balloon” come due of the remaining principal balance. You would then re-negotiate the interest rate for the next fixed rate period. The closing costs for this type of loan are typically lower than the conventional fixed rate mortgage.
First Time Homebuyer
For those who have not owned a home in the previous three years, there are various First Time Home Buyer programs available. This type of financing allows new homebuyers, who do not have a sizeable savings, to finance a home with a low down payment. The terms are usually a 30 year fixed rate and some provide closing cost assistance. There are certain income restrictions and limits to how much you can borrow as these are backed by various government agencies.Follow me on Google+