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Home Financing Tips

Whether you are buying your first home or moving on to a new home, these tips will provide answers to your questions and help guide your through the mortgage process. When you are ready to get started, our mortgage lenders will use their knowledge and mortgage experience to guide you through the entire process.

A few tips to help you get started:

Pre‐Approval Getting pre‐approved for a mortgage is one of the most important steps in the process. A pre‐approval will help determine what you can realistically afford. A Johnson Bank pre‐approval is a conditional approval of your credit documentation. So, when you are ready to make an offer on a home the seller knows your offer is solid. For a pre‐approval you will need to provide these documents:
  • your social security number to obtain your credit report
  • pay stubs, W‐2's and possibly full tax returns for income documentation
  • bank and asset statements for verification of liquid and retirement savings
  • any other information needed based on your individual situation; for example, business tax returns, current real estate holdings, etc.
Contact a Johnson Bank mortgage lender, who will guide you through the pre‐approval process and provide you with loan options to consider.
Credit Score As part of the home buying process, your lender will request a credit report. The report will include your credit score. Your lender will look at the score to determine how likely it is that you will make prompt payments. It is also the primary driver for determining the interest rate you will pay on your mortgage loan. The higher your credit score the lower your interest rate may be. In addition, you will want to review your credit report, check for errors and fix them.
Down Payment Saving for a down payment will allow you to start out with more equity, own your home faster and qualify for lower interest rates. It is very important to save as much as possible for your down payment. Typically, down payments range from as low as 3% to a standard of 20% of the sale price. Keep in mind, if your down payment is less than 20%, you may need Private Mortgage Insurance (PMI). Johnson Bank offers several low down payment options for qualified individuals to choose from.
Debt The less debt you have before purchasing a home, the better. Lenders will review your debt‐to‐income ratio to measure your ability to manage your monthly payments. Debt will include any of your credit cards, student loans, auto loans and the new mortgage loan. As you lower your monthly debt, your credit score may rise.
Monthly Expenses Generally, mortgage payments will include principal, interest, insurance and property taxes. Your insurance and property taxes are deposited into an escrow account that is set up for to make tax and insurance payments on behalf of the homeowner. It is a good idea to create a budget with your new mortgage payment. You will want to try it out for a few months before you buy your home. This way you can bank the difference, see what paying a mortgage will be like, and save some extra cash too!

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