Financing is usually one of the most intimidating aspects of buying a home for first-time homeowners. At FrontierLiving, we can help you approach it with a lot more confidence...and far fewer headaches. Our New Home Counselors will work with you to help you better understand the options available to you and guide you through the complexities of applying for and securing a home mortgage. So take your time and ask as many questions as you want. We're here to help you find the best fit for your financial needs.

Choosing a Lender
FrontierLiving provides you with access to our Preferred Lender. This well-established financial institution offers a full range of mortgage options as well as competitive terms and conditions. Staffed by a team of highly experienced professionals, our Preferred Lender can work with you to develop a personalized financial profile, based on your monthly income, expenses and lifestyle. In addition, they'll walk you through the specifics of the various loan structures, including specific terms and conditions. Whether you opt to work with our Preferred Lender or another qualified financial provider, our New Home Counselors are available to help you sort through your options, so you end up with a home loan that makes you feel as comfortable as your new home.

Getting Prepared
When you apply for a home loan, you'll be asked to provide some key documents that basically give the lender a general idea of your financial history, including your income, monthly expenses and current debt. For a lot of people, this is one of the most time-consuming aspects of the home-buying process because you may need to contact various organizations to get copies of records that you no longer have, such as old bank statements, tax returns or paycheck stubs. To help you get a head start, we've put together a general list of documents requested by most lenders. Keep in mind, some may require even more documentation, but this will give you a good idea of what to expect.

• Complete credit application
• Paycheck stubs for the past two pay periods
• W2 Forms (or 1040 Forms if you're self-employed)
  for the past two years
• Federal Income Tax returns for the past two years - Copies of your bank statements for the past two months
• All relevant legal documents, such as divorce decrees

Out-of-Your-Pocket Money
One of the biggest barriers for first-time homeowners is the challenge of gathering the upfront money necessary to "put down" on a new home. Obviously, the more you can put down, the more you offset your costs later, but sometimes these costs can catch buyers off-guard...and a little short of funds. To help you prepare for what you'll need to set aside, we've provided a basic description of the three major out-of-pocket costs you'll encounter when buying a home.

Earnest money
Earnest money is the deposit you put down when you make an offer on a home. It tells the seller that you’re seriously invested in buying that particular home. This deposit is usually not more than 2 percent of the purchase price (so for a home of about $160,000, you’re looking at about $3,200). If your offer is accepted, the earnest money is applied toward your down payment; however, you can lose your earnest money if you back out of a purchase without a legitimate reason once the home is under contract.

The Down Payment
A bank or mortgage broker usually requires you to make a down payment that, depending on your type of loan, could equal to 3 percent or more of the total price of your home. However, many lenders now offer incentives to first-time homebuyers that require little or no money down upfront. At FrontierLiving, we will let you know about special offers like these that are available in our various communities.

Closing Costs
First-time homebuyers are often surprised by a series of fees that are required to "close out " their home purchase and take possession of their new home. Called "closing costs," these fees cover services like title searches, attorneys, processing, insurance, recording, inspection, loan origination, points and more. All-in, they can add up to about 3 percent of the total price of your home. Keep in mind, some mortgages can be structured to incorporate these fees into the total amount of your loan; however, if you do so, you will end up paying interest on these fees over time.

Mortgage Options
If you're planning on buying your home with cash, you can skip this section entirely (and congratulations on your considerable resources!). Most buyers, however, require a loan to make a home purchase. This loan arrangement is called a mortgage and consists of specific terms and conditions that outline your agreement to pay back the loan over time. The following descriptions provide a general overview of the most common types, rates and payback terms of mortgages. They are meant to help you gain a basic understanding of the various options available, so you can work with your financial professional to determine the best fit for your finances.

Mortgage Types: Conventional vs. Government Loans The two most common mortgage types are conventional and government-backed loans. In a conventional loan, a bank or mortgage broker requires that you make a down payment, usually in the range of 5 - 20 percent. The remainder of the purchase price is provided by the lender, which you pay back over a period of years.

A government loan is similar, but instead of a private lender, the U.S. government loans you the money. Usually, a government loan is classified as an FHA loan, meaning it is backed by the Federal Housing Administration (FHA). These loans can be a good option for first-time homebuyers who don't have much money for a down payment, since these loans allow buyers to put down as little as 3 percent (and sometimes lower). If you or your spouse has served or is serving in the military, you may also qualify for a Department of Veterans Affairs (VA) loan, which typically offers highly competitive rates and terms.

Mortgage Rates: Fixed vs. Adjustable
You can choose between two main mortgage rates: fixed-rate or adjustable rate mortgages (ARMs). With a fixed-rate mortgage, your interest rate remains the same throughout the loan. With an ARM, your monthly payments are fixed for certain number of years (usually one to five years), and then they are adjusted according to reflect current market conditions. With these mortgages, your minimum and maximum payments are often defined in the terms of the loan.

Mortgage Payback Terms
Like any loan, the longer it takes to pay off your mortgage, the more you pay in interest. But remember, you can deduct that interest each year at tax time, so it's less painful than, say, paying down a credit card. You can select different payback terms for both fixed-rate mortgages and ARMs, Typical mortgage terms are 15 or 30 years, and most first-time homebuyers choose a 30-year term as opposed to a shorter one to keep their monthly payments to a minimum. However, if you have a large sum of money to put forth as a down payment, you might be comfortable with a shorter-term mortgage.

Interest and Points
The interest you pay is critical in assessing the terms of your mortgage. Remember that for most of the life of your loan, you are paying more interest than principal--although your interest is deductible from your income taxes. The difference between 5 and 7 percent could means tens of thousands of dollars over the life of the loan.

One way many lenders will allow you to reduce your interest rate is to pay “points” up front. A point is equal to one percent of your loan amount. For example, if the price of your home is $180,000, and you put down 5 percent or $9,000, your total loan amount will be $171,000. If you pay a point to reduce the interest rate, you will owe an additional $1,710. It increases the amount you owe at closing to $10,710, but you will reduce your overall interest rate. It's one more thing to consider based on your personal finances and long-term plans. For example, if you don't plan to be in your new home for more than a couple years, you may not realize the benefit of paying points upfront. If you plan to pay on your mortgage for several years, however, you could realize significant savings through the lower interest rate.

FrontierLiving New Homes on Layaway Program Imagine you've found the absolute perfect home, but you're just not in a good position financially right now to buy it. Rather than risk someone else coming along to buy it before you, FrontierLiving now gives you the option of putting the home on "layaway." Just as the name suggests, our New Homes on Layaway program allows you to stake your claim on a house--and take it off the market--by making monthly installment payments on it over a period of time. You can continue to make these payments, which are determined based on the price of the house, for up to 12 months. Each payment is applied to the cost of the home, so that when you actually secure financing, you need only pay for the remaining balance owed on the house.