The Basics of Home Ownership
Whether you are buying or building a home, being prepared during each phase of the purchase or construction is very important . Heritage has compiled a brief series of tutorials on the benefits of home ownership, choosing your home and financing your home. These are meant to get you started with “the process.” We also have links to other helpful resources and, of course, you can ask one of our mortgage professionals if you have any further questions.
In addition to the feelings of comfort and pride of owning a home, there are many tangible benefits to owning property. Here’s a look at a few key reasons to buy:
- You're getting more bang for your buck.
In our current low-interest rate environment, you are often able to buy more space and amenities than you are able to get in a rental situation.
- You're building equity.
As a homeowner, you are building equity and ownership in your property – which increases your personal net worth.
- You get a break at tax time.
Homeowners receive tax benefits in two different ways. First, if you itemize on your 1040, you may be able to deduct the interest paid each year. And second, your real estate taxes may also qualify as a deduction.
NOTE: This web site is not designed to provide legal, tax or accounting advice. As a service to users, general information is provided. Contact your lawyer, tax professional or accountant for advice on your specific situation.
Finding just the right home for you and your family is a big decision. And it involves many different aspects of your life – both objective and subjective.
Before starting your house hunt, it’s important to get the whole family involved (at least the key decision makers and older children) in determining the most important factors in your home selection.
Once you’ve determined your priorities in a new home and your price range (see Financing Your Home), working with a qualified realtor can make your home search go more smoothly. To find the right realtor, ask respected friends or co-workers for referrals.
In the meantime, here’s a list of things for you to consider and discuss when selecting your next home...
Objective Factors
- Price range (try our Loan Qualifier calculator for help)
- Tax rates
- Size and features
- Proximity to work and other key locations
Subjective Factors
- “Feel” of the neighborhood
- Quality of local schools
- House amenities
- Architectural and decor style
There are several steps to financing your home with a bank loan. Many professionals state that the first step is to work with your banker to become pre-qualified. And while this is an important part of the process, we believe that there is one step you should take before talking to a bank – and that is to review your credit report.
In today’s world of “stolen” identities, credit fraud and the simple fact that errors occur, it is imperative that all consumers periodically review their credit report for accuracy. One place to check how you are rated – and therefore perceived – by banks is at http://www.myfico.com.
After reviewing your credit report – and correcting any inaccuracies – then the following steps can be followed:
- Estimate how much home you can afford. Our Loan Qualifier calculator can help.
- Get pre-qualified for a home loan. Call us today to talk to our mortgage professionals. This is a good time to gather all the documents you’ll need for the final loan application. Check out this handy Mortgage Application Checklist. Also, if you plan on comparing different mortgage options, you may want to use this Mortgage Worksheet to keep your facts and figures straight.
- Carefully search for the right home, have a professional inspector conduct an inspection and make an offer. (See Choosing Your Home in the above section for recommendations.)
- Conduct loan interview and complete paperwork. Most of your documentation should already be organized and ready to submit. (See step 2 above.)
- Contact your insurance agent regarding homeowners insurance. In the meantime, we are reviewing your financial documents and are awaiting the results of a property appraisal.
- Sign closing paperwork. And start packing!
NOTE: This represents a typical financing process. Not all situations are the same, and your individual loan process may be different. By working closely with your banker, you will stay informed at all stages of the process.
This page is intended to provide the public with basic information about buying or building a home. It is not intended to be a legal interpretation of the regulations and policies of any federal, state or local government entity or that of Heritage Bank of Central Illinois.
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Annual Credit Report
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MyFICO
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