Welcome to QNB's Lending Blog. Here you'll find helpful articles to keep you informed about the latest retail lending news.
- Planning to Buy This Spring? Get Ready Now!
- How Does Refinancing Differ from Home Equity Lines of Credit?
Planning to Buy This Spring? Get Ready Now!
If you’re planning to buy a home this spring, you should prepare now. Here are five things you can do to help you get into the home of your dreams as quickly as possible.
Before you start looking for a home, get pre-qualified. This way, you’ll know what you can afford and can shop within your budget. Plus, you’ll be a “serious” buyer to a seller. Discuss loan options with your lender and start thinking about how you plan to finance your home.
Hire a real estate agent.
You can do a lot of searching on your own, but it’s still essential to have a real estate agent help you with the home buying process. Your agent can help you find a home you like, within your budget, and negotiate the best deal for you.
Find out your credit score.
Your credit score is key to getting the best loan possible. By law, you get one free credit report each year by going to annualcreditreport.com. Take advantage of this free offer and review your score. Make sure everything is in order. If your score is lower than anticipated, talk to your lender about how you can improve it before buying your home. There are things you can do to change your score in as little as three to six months. The better your score, the more options you’ll have.
Save for your down payment.
The type of loan you choose determines the amount you need to save for a down payment. For example, if you’re eligible for an FHA loan, you put down as little as 3.5% of the purchase price. Some loans require no down payment at all. In most instances, though, you need to prepare for a down payment of approximately 20% of the purchase price.
Get your documents in order.
If you know you’re ready to buy within the next three to six months, start a file to use for documentation purposes. Ask your lender what you’ll need for the loan and start preparing now. Some of these documents include paycheck stubs, W-2s or I-9 tax forms, bank account statements, investment statements, details on current real estate holdings, or tax returns. Keep this information updated for your lender when you’re ready to buy.
Buying a home takes time, but the process is easy when you’re prepared. To learn more about the mortgage process at QNB Bank, give us a call at 215-538-5600. We’ll walk you through everything you’ll need to get into your home as quickly as possible.
How Does Refinancing Differ from Home Equity Lines of Credit?
Cash-out refinancing and opening a home equity line of credit are both good options for making funds available using the equity in your home. But, there are significant differences between the two. Here is some information about both options to help you make the right choice for your circumstances.
A cash-out refinance actually pays off your existing first mortgage and creates a new mortgage loan. At closing, you’ll receive a lump sum from the money left over after your existing mortgage is paid off – which you can use as you wish. Many choose this option to gain access to cash or get a mortgage at a more competitive rate. Just know that a cash-out refinance has closing costs much like your original mortgage – and those can be significant.
Home Equity Line of Credit
A home equity line of credit, or HELOC, is considered a second mortgage as it is usually taken out in addition to your existing first mortgage. With a HELOC, you can withdraw funds as needed during a predetermined draw period – usually 10 years. You pay interest only on the amount you draw. When the draw period ends, you are no longer able to withdraw your funds and you have a certain period of time to repay the outstanding balance. Unlike a cash-out refinance, you usually have no closing costs.
The benefits of doing a HELOC include paying down principal faster than a cash-out refinance and the ability to recover costs faster. Plus, the cost to open and use a HELOC is much lower than a cash-out refinance.
What's the Best Option for You?
It depends on your needs and circumstances. If you need access to the equity in your home, do your homework. What is it you need the money for – something short-term? Or, do you want to lower your mortgage rate and use the cash for other improvements or expenses?
We're happy to help you find an option that's right for you. To learn more about the cash-out refinance and HELOC products available at QNB Bank, call us at 215-538-5600.
Information is for informational purposes only and is not intended to provide legal or financial advice.