Welcome to the Charter Bank Home Buyer Knowledge Center
Home Buying Resources
Whether you're a first-time buyer or an experienced real estate investor,
we've got information you'll need to buy and finance your home or
property. Click on one of the steps below to learn more.
Step 1. Determine what you can afford
Step 2. Get pre-approved
Step 3. Prepare
your offer
Step 4. Finalize financing
Step 5. Arrange for insurance
Step 6.
Prepare for closing
The information we've provided on home buying is intended to
provide some basic guidelines and should not be treated as comprehensive and
complete.
Step 1. Determine what you can afford
Before you start looking for a home to purchase, find out what you can afford. Our selection of mortgage calculators will help you get started.
Make sure you won't have any surprises by getting a copy of your credit report prior to your home search. TrueCredit™ has information and resources that can help you manage your financial profile.
Step 2. Get pre-approved
When you're ready to move to the next step, let Charter Residential Lending help you get pre-approved for a mortgage. Pre-approval means that you have an approved mortgage, subject to an appraisal of the property, and offers many benefits:
- It will tell you how much house you can afford and what your monthly payments would be.
- It allows you to move more swiftly when you find the right home.
- It gives you an edge when you make an offer, because the seller knows you're likely to get a loan and close the deal.
- You save time on closing your loan, because you've already assembled your paperwork.
Step 3. Prepare your offer
Once you've found the property you want to purchase, the next step is to make an offer. Remember that this is a contract that will legally bind you if the seller accepts. Always make an offer within your ability to pay. Your offer may also include:
- Pre-approval letter. To strengthen your offer, include a letter from Charter that shows you are pre-approved for a mortgage.
- Deposit. It is customary to include a deposit with your offer. It will be applied to the down payment if the deal goes through and is only refundable under certain conditions.
- Contingencies. You should include some standard contingencies, or conditions, in the purchase contract. You may also want to add unique contingencies depending on your circumstances. Without contingencies, a buyer could forfeit his deposit under certain circumstances if he backs out of the deal.
- A financing contingency makes the sale dependent on your ability to obtain a loan commitment. Include this even if you have a pre-approved mortgage, since final approval is subject to an appraisal of the property.
- An inspection clause gives you an "out" from buying if serious problems are detected. It also gives you another chance to negotiate the purchase price if repairs are needed. Standard home inspections typically cover the structure, electrical, heating and air conditioning, plumbing, fireplaces and appliances. You also may want to consider hiring experts to inspect the home for termites, lead paint or a number of health-related risks, such as radon gas, asbestos or possible problems with the water or waste disposal system.
- Seller Responsibilities. The purchase contract also should also cover the seller's responsibilities, including passing clear title, maintaining the property in its present condition until closing, and making any agreed-upon repairs.
The seller may accept, reject or counter within hours or days, depending on the quality of your offer and the seller's desire to sell. You can then accept the counteroffer or "counter the counter." Once the seller accepts, a third party (a lawyer or an escrow or title company) completes the transaction with your lender.
If your contract is accepted, you'll need to coordinate any home inspections and appraisals, arrange for homeowners insurance and finalize your mortgage.
Step 4. Finalize financing
Your Charter loan officer can help you arrange a mortgage that best fits your needs. They can also tell you about special programs geared to first-time buyers or veterans. For those wanting to build their dream home, Charter can set up loans for residential lots and home building. There are many different types of home loans to choose from, including:
- Fixed-rate mortgages offer the advantage of having monthly principal and interest payments that remain essentially unchanged over the term of the loan. If you plan to stay in your new home for a long time, a fixed-rate mortgage may be your best choice. But in certain types of economies, interest rates for a fixed-rate mortgage can be considerably higher than the initial interest rate of other mortgage options. That is the one disadvantage of a fixed-rate mortgage. Once your rate is set, it does not change and falling interest rates will not affect what you pay. However, you do have the option of refinancing if interest rates drop significantly.
- Adjustable-rate mortgages (ARMs) may be preferable for home buyers who don't plan to stay in their home long, are buying when interest rates are high or expect their income to increase. In most cases, the initial interest rate of an ARM is lower than a fixed-rate mortgage. However, with an ARM, your mortgage rate will rise and fall with interest rates.
- The convertible ARM is a combination of both fixed-rate and adjustable-rate mortgages. It allows home buyers to convert to a fixed-rate mortgage after a set period of time. For example, you could get a one-year ARM with the option to convert any time after the first through the fifth adjustment period. This way you can initially benefit from the lower interest rate of a standard ARM, and then take advantage of locked-in payments later.
- Balloon mortgages require you to pay off your loan in full or refinance at the end of the mortgage term. The advantage of a balloon mortgage is that your monthly payments during the mortgage term are generally lower than they would be for a traditional mortgage. If you anticipate moving in five to seven years, you can take advantage of lower interest rates. If you end up staying longer in your residence, you'll need to refinance at the then-current interest rate. Generally, balloon mortgages require a larger down payment.
- VA and FHA loans are offered through the Veterans Administration and Federal Housing Administration. There are caps on the size of a VA loan you can get, but this loan could be ideal for buying a lower priced home with a small down payment. FHA loans are available to Americans with smaller incomes who are buying modestly priced homes.
Step 5. Arrange for insurance
The cost of homeowner's insurance can vary from one company to the next, as can the type of coverage. Charter Insurance works with a multitude of insurance companies, so they can help you shop around for the most affordable prices on the coverage that best suits your needs.
There are various kinds of coverage, so when you're shopping for insurance, be sure that you are comparing similar kinds of coverage. Most buyers take out a comprehensive homeowner's insurance policy that covers such things as personal possessions, liability, vandalism, theft, water damage and loss of the use of the dwelling. However, most policies don't cover loss from flood or earthquakes. If the property is located in a flood zone, you may need to carry flood insurance.
You can reduce insurance costs by raising your deductible. In addition, some insurance companies may give you a price break if you have both your homeowners and auto insurance policies with them. Visit the Mortgage Servicing area of our website for frequently asked questions about property insurance.
Step 6. Prepare for closing
Most home purchases close within 15 to 90 days, depending on the complexity of the transaction and the conditions attached to the purchase contract. Before your closing date, make sure all the necessary paperwork and deposits have been completed. If the mortgage, title work, homeowners insurance and other items necessary under local and state laws are not completed, the closing may have to be postponed. To avoid last-minute surprises:
- Estimate your closing costs. Your Charter loan officer will give you an itemized list prior to closing. Costs typically range from 2 to 7 percent of the home's purchase price. Typical expenses can include title search and insurance, property appraisal and inspection, recording fees, attorney fees, transfer taxes, points and loan origination fees. Additional funds will be needed to establish an escrow account for payment of homeowners insurance, property taxes and possibly private mortgage insurance (PMI).
- Choose a date for closing, keeping in mind that the day of the month chosen can affect closing costs, such as pre-paid interest. If you're renting, you'll want to set a closing date near the end of your lease to avoid paying unnecessary rent. If you plan to move on closing day, schedule the closing in the morning.
- Schedule a final walk-through to make certain the seller has completed any repairs specified in the purchase contract and has satisfied any other contingencies involving the home's condition.
