Financials First

Budgeting for your new household – expenses to consider when buying a home

So, you want to buy a house? Awesome! It’s a solid investment, interest rates are still historically low and owning a home remains part of the “American dream.”

But here’s one very important thing to consider before doing so: If you’ve always winged it when it comes to your monthly budget, now is the time to sit down, assess your finances and make a plan.

Simply put, you need to make two piles: one representing the money coming in and another that signifies what’s going out (your monthly bills). After all, once you make the decision to buy a home, there will be more items to add to the “going out” pile, so it’s wise to plan accordingly.

“Budgeting should not be a daunting task,” says Kelley Harwood, Vice President of the Consumer Lending Group at First National Bank. “It’s just part of the process of buying a home, and the more prepared you are for the added costs that come with buying a home, the better off you will be in the long run.

“By preparing a budget, there are no big surprises because you’ve planned ahead. It makes the entire experience much more enjoyable.”


Getting started on a budget

You’ll want to keep your mortgage payment at a certain percentage of your gross monthly income. Lenders look at your debt-to-income (DTI) ratio, which they calculate by dividing your monthly debt obligations by your pretax (or gross) income. The percentages vary, but most experts agree that your DTI ratio should fall between 40 and 45 percent.


Consider repairs, project costs

It’s hard to estimate how much money you will need for home maintenance, but a good rule of thumb is 1 to 2 percent. However, high-cost repairs are occasionally needed and can push your monthly and yearly maintenance spending beyond that.

“When you revisit your expenses annually, think about upcoming expensive projects. For instance, you may have a 20- or 30-year-old roof, or a deck that may need replacing every decade or so. Include these projected expenses in your budget in addition to the 1 percent to 2 percent for general maintenance,” says [2]

Another home expense will be utilities, which may differ significantly from the utilities you may pay at a rental property.


Other things to consider for your budget

Outside of home costs, there are obviously several other expenses we face on a monthly basis: transportation, clothing, food, medical, recreation, savings and charitable gifts, to name a few.

Couples who buy a home may want to consider another major additional expense: kids.

“Life is going to happen in the years you occupy your home. Before you get married to a mortgage, look ahead and consider events that might increase your living expenses down the road. Guess what? Kids cost money,” says “According to the USDA, a middle-income married couple spends an average of $727 a month on non-housing expenses in a child’s first years of life. Depending on what you make or where you live, it could be more, it could be less.” [3]


Don’t be overwhelmed

“The important thing to remember is to not be intimidated by the home-buying process,” says First National’s Harwood.

“And you won’t be when you work with a First National mortgage expert. We’ll walk you through every step of the process and go over the costs to help you with your budgeting and answer all of your questions. We make it an enjoyable event in your life.”

Got questions? Stop by your local First National Bank branch today and visit with a mortgage loan expert (They love explaining home loans. Seriously, it’s their thing.)


[1] “How Much Of My Monthly Income Should I Spend On A Mortgage?” –


[2] “Budgeting for New Homeowners” –


[3] “5 Steps to Buying a Home That Won’t Bust Your Budget”      –

A Harmonious Relationship

Why it’s important for mortgage loan officers and real estate agents to get along.

Most homebuyers seek out a mortgage loan as a way to finance what is one of the largest financial decisions most people make. Playing vital roles in this process are the mortgage loan officer and the real estate agent.

But what happens when your mortgage loan officer and real estate agent don’t get along? It means a big pain in the neck.

“It’s important that the homebuyer find a mortgage loan officer and a realtor who can work together, and who put the best interest of the homebuyer first,” says Kelley Harwood, Vice President of the Consumer Lending Group at First National Bank. “We work closely with realtors to make sure we’re all on the same page. At the end of the day, we’re working for the homebuyer and we need to do what’s in their best interest.”

While it’s not necessarily the homebuyer’s job to double check that the loan officer and realtor would hang out together, it is important to recognize that a functional, positive working relationship is present between the two.

Here’s why:

There’s no ‘I’ in team

Real estate agents rely on mortgage loan officers to service their clients. Loan officers also rely on real estate agents to service the same clients, plus keep an open line of communication between all parties. Whether you seek out a real estate agent or a loan officer first, in the end everyone has the same goal of helping the homebuyer get their ideal home.


Working smarter

“Knowing the basics prior to meeting with a loan officer will give you a head start and will give you more confidence as you begin the home-buying process,” says Harwood. Though real estate agents can provide homebuyers with basic information about buying a house, lenders will help homebuyers with more complex details. Lenders and real estate agents alike want to make this process as easy for the buyer as possible. A lender/agent tandem that work well together can resolve potential discrepancies quickly and easily.


The homebuyer’s first

Homeowners might run into problems with their loan, and that happens. According to the National Association of Realtors, 45 percent of first-time buyers say that the mortgage application and approval process is occasionally more difficult than expected. [1] Lenders are here to make those problems transition with ease. “By working with the real estate agent and the homebuyer, we try to make this process as simple as possible, even if there were to be problems,” says Harwood. “We work to make sure our client experience is about the trust they have in us, not about our financial gain.”


Going the extra mile

Homebuyers have numerous local and national lenders at their fingertips, so real estate agents and mortgage loan officers alike need to take advantage of every reason homebuyers should want to work with them. An efficient and strong relationship between the mortgage officer and the real estate agent builds a foundation of common sense and a culture of cooperation and service, giving both companies an immediate advantage. Accountability is built, communication is established, and this positive relationship between real estate agents, lenders and homebuyers will get people moving faster than ever before.

Got questions? Stop by your local First National Bank branch today and visit with a mortgage loan expert. (They love explaining home loans. Seriously, it’s their thing.)

[1] Mortgage loan officers and real estate agents: how they work together –
[2] 4 Ways a Loan Officer Can Work Better with Real Estate Agents –

The Finish Line Is Near

An offer was made, it’s been accepted – time to close on your home

You run into a friend at the grocery store and she starts telling you about an amazing experience.

“There were ups and downs, twists and turns – and a loop-the-loop right at the end,” she says.

You think she’s talking about a wonderful amusement park ride.

“But we made it,” she says. “We made it through the process and we bought our dream home. We’re so happy!”

While the home-buying process certainly isn’t like that for everyone, it can at times seems like a roller coaster ride.

  • Are there ups and downs?
  • Is the process full of thrills, and occasionally chills?
  • Are there times when you just wish the ride would end?

The answer to all those questions is “sometimes.” But after the twists and turns – and perhaps an uneasy moment or two – at the end of the ride, most people look back and think, “That was an amazing experience.”

The fact is, buying a home can be full of all sorts of emotions, but there’s no need to feel intimidated or overwhelmed.

“If you go into the home-buying process knowing that there will be natural ebb and flow, it makes it much more enjoyable,” says Kelley Harwood, Vice President of the Consumer Lending Group at First National Bank.

“Knowing that and understanding the process will make the experience a much more enjoyable event in your life. And when you have a mortgage loan expert you trust to help guide you through the process, you will have a better idea of what to expect.”

Below, we look at a few of the common issues that might pop up toward the end of the home-buying process, where the twists and turns often appear. Knowing that they might be coming gives you a hand up in the process.


The appraisal

Before a bank gives final approval for a home loan, there needs to be an appraisal of the home you wish to buy to determine the current value of the home, since the home is the collateral for the loan.

The appraisal covers everything from measuring living space and confirming the year the home was built, to assessing working condition of plumbing, heating and air conditioning. The appraiser will also compare the property to recent home sales in the area.

There is typically a cost for the home appraisal, which averages between $300 to $600 [1].  It’s typically paid for up front by the buyer or seller, or it can be added into the home loan, too.

“Sometimes the appraised value is lower than the agreed upon purchase price,” says First National Bank’s Harwood. “It can happen when a homebuyer gets in a bidding war for the home, or because the buyer has an emotional attachment to a particular home, and that might lead them to offer more than the home’s current market value.

“But there are solutions, which include asking for another review of the appraisal, or perhaps renegotiating with the seller to lower the price.”

Regardless of the solution you choose, having a mortgage loan officer you trust is vital.


Making sure the home is insurable

If the home you wish to buy isn’t insurable, you won’t be able close on the house – unless, of course, you’re paying cash, which doesn’t happen very often.

Why would a home not be insurable? Perhaps there was water damage in the past and the previous owner filed a major insurance claim. That will show up on insurance records and your insurance company may refuse to insure the home. It’s best to check ahead of time.



The dreaded tax lien

It doesn’t occur often, but there are cases where you discover at the 11th hour that the seller can’t actually sell the home because there is a significant tax lien against the seller and the property. In this case, the seller needs to pay that tax lien before you can buy the home.

Again, this is an infrequent occurrence, but it does occasionally happen. This is yet another reason to have a mortgage loan officer on your side. They will work with you to make sure these things are looked into so that when you get to the closing there are no surprises.


Cue the theme from ‘Jaws’ – it’s the walkthrough

Dun-dun, dun-dun. Dun-dun, dun-dun. Just when you thought it was safe to breathe a sigh of relief – it’s time for the walkthrough.

It might have been weeks since you’ve been inside the home you’re about to buy. But this is when you want to make sure this is the same home you put your offer on weeks ago.

Are the appliances that the seller agreed to leave behind still there? What about the equipment for the fireplace or whirlpool? Did the seller leave everything they were suppose to leave with the home?

Did the seller fix that leaky faucet? And the top step on the backyard deck? And the outlet in the kitchen? As you take your final walkthrough, you want to be sure the seller has made the fixes they said they would.

But what happens if they haven’t?

“You can have your realtor call the seller’s realtor and make sure those things are taken care of before you close on the home,” Harwood said. “The seller can also set aside escrow funds for repairs that won’t be done prior to closing.”

Bottom line: The sellers shouldn’t get paid until those repairs are completed.


Time to celebrate!

You made it to the end of the ride. Congrats! At this point, it may feel like you should get a free t-shirt that says, “I survived the closing!”

“As I mentioned before, knowing that there may be ups and downs in the home-buying process will better prepare you for what might be ahead,” says Harwood. “Knowing your mortgage loan officer has your back on this wonderful ride makes all the difference.”

Got questions? Stop by your local First National Bank branch today and visit with a mortgage loan expert. (They love explaining home loans. Seriously, it’s their thing.)


[1] “Mortgage Appraisals and Appraised Value,”

4 Tips For Launching a Successful Business

As you take the steps to nurture your brainchild into a full- fledged business, it’s a good idea to make sure you have your bases covered so you don’t sputter on start up.

And if your business is already up and running, it can’t hurt to consider these tips and see if there’s anything to shore up.

Ensure your “business” is a business

There’s nothing more disheartening than trying to turn your dream into a reality … and then realize someone beat you to your name or identity.

Use the U.S. Patent and Trademark Office’s trademark search tool to see if your business name is in use. If it’s available, pounce! Apply for trademark protection right away.

Then check website domain availability and file your business in the state your business is located to make everything official.

Not sure if your side project counts as a business?

“Once someone is spending 20 hours a week on a project and counting on the revenue to make up as much as 50 percent of their personal income, it’s definitely a business for financial and tax purposes,” says Kathryn Ameta, a San Francisco-based financial advisor.[1]

Organize and clean up financial details

Building your business on stable ground from the beginning is much easier than scrambling to sort financials later in the game.

One expert recommends “reviewing and working on your credit, saving money, and [getting] up-to-date on your finances, including taxes,” as soon as possible before launch. [2]

Not to mention, financial stability signals reliability to potential lenders and banks. Most banks will look specifically for a good credit score and a detailed budget in your business plan. If they see that, you have a better chance of receiving more funding to start your business as well as better terms and lower interest on loans.


Look to the future

While it’s easy to get buried in the “right now,” seasoned entrepreneurs recommend looking ahead, especially when it comes to choosing a bank. Be on the lookout for a bank that offers both free checking and services like financial advising, as you may need help with investments and cash flow in the future.

Relationship-forward customer service and added benefits such as financial wellness programs and online banking abilities can go a long way as well.

In 10 years, do you hope to expand? Make sure to look into banks that have a community-building focus, as they may be more likely to lend to small businesses.

“Investing in local businesses allows us to build up our communities. It’s something we are very passionate about as a bank, so we work closely with our business customers and support them as much as we can,” says Clint Sporhase, Managing Director of Small Business Banking at First National Bank.

Have a plan

Your business needs a business plan. It will help get you through early stages of your business and force you to think important components. Not to mention that it’s necessary in order to get funding.

You can start by writing down the general what and why of your organization. From there, you should show you have an understanding of the marketplace — where you fit and what your competitors are up to. Lastly, have a plan for how much funding you need and project where you can take your business in the next five to 10 years.

Writing your business plan isn’t easy. Check out the U.S. Small Business Association’s (SBA) websitefor great resources on planning and running your business. You can also find local SBA branches and seek help there.

With your business plan in hand, you may also want to seek out a bank that’s a preferred SBA lender for a loan. That will save you time in getting your loan approved, and you’ll sleep easy knowing your lender has a proven track record.

“We truly believe in the Small Business Association’s mission, and as a preferred SBA lender, we’re able to offer very favorable terms to a young business and help get them up and running,” said First National Bank’s Clint Sporhase.

Still have questions? Visit to learn more and connect with a business banker.

Member FDIC

[1] “How to Choose the Right Bank for Your Small Business.” Lagorio, Chafkin, Christine. Inc. 

[2] “14 Startup Tips From Small Business Pros.” Detweiler, Gerri. Dec. 17, 2017. Forbes.

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