Buying a home can be very exciting. If you are a first-time home buyer, you probably have a lot of questions. Buying a home is a long-term commitment so, before you take that first step, here are some important things you should know:
1. Know Your Budget – As you may know, buying a home is not cheap. There are fees for home appraisals, inspections, closing costs, moving costs, down payments, etc. Before you do anything, make sure that buying a home won’t break your budget and know how much you can afford before you even start looking. Click here to check out our simple budgeting tool!
2. Paperwork – Once you have a price range in mind that will fit into your budget, go ahead and start gathering your needed documents to get pre-qualified. This will include items like your most recent 30 days paystubs, last two bank statements (all pages), last two years tax return documents, and last two years W2s and 1099s for you (and your spouse). You will also need to provide your home address for the last two years, work history for the last two years, information about your employer, and information about your current landlord (if applicable).
3. Get Pre-Qualified – After you have gathered up all of the necessary paperwork, contact your Mortgage Loan Officer to get a pre-qualification letter. Getting a pre-qualification letter shows that you are a serious buyer and gives you the added leverage when buying a home. Sellers know that a pre-qualification letter means you are ready to buy a home, so it helps make your offer look better.
4. Find a Realtor – A realtor will help you find the right home for you. Before contacting a realtor, decide what you are looking for in a home. Share any wants/needs, price range, etc. so they can research homes that fit your description. Realtors have local market knowledge, they will be your adviser and advocate during the home-buying process, help you with the logistics of the contract, inspections, etc. and will attend the closing with you to ensure that all of your interests are protected. Talk to friends and family to see if they have experiences or recommendations to share with you on local realtors in your area.
5. Found a home and made an offer, now what? - Talking to a licensed Loan Officer is an important step to getting the right mortgage loan. Every borrower is different and a Loan Officer knows which questions to ask in order to best match you with the right loan and monthly payment.
Once you have found the perfect home for you, it’s time to make an offer and begin the loan process. Once your offer is submitted, you will give your realtor your Earnest Money check and you will get credit for this money at closing. Also, the bank will collect your appraisal deposit once you have signed your disclosures.
You will sign a contract, complete the loan application, gather any remaining documentation (remember the information from #2 above), and sign the initial disclosures. This is your initial paperwork to get the ball rolling for your loan to move forward. These documents include the Loan Estimate and Intent to Proceed.
6. Prepare for Closing – There is a period of time between signing the contract and closing that is used for processing and underwriting your loan. When your loan is cleared to close, the closers can begin working on your final documents! They will issue an initial Closing Disclosure to be signed 3 business days before you can close. The CD will give you details of your loan such as the loan terms, costs at closing, total loan costs, a breakdown of the fees, calculating the cash to close, and summaries of transactions.
Also at this time, your loan can be scheduled to close. Your lender and realtor will coordinate a time with you and the title/closing company.
7. Finally…closing and Moving Day! You will go to the title office to sign all of your loan documents at the designated time selected. At this time, you will need a valid government issued ID and either a cashier's check or wire the funds needed for closing. If you are married, even if your spouse is not on the loan, they will need to come to closing with you and bring their ID. Once all borrowers and sellers have signed their documents, keys will be exchanged and the title company will disperse the money… then the fun of moving begins!
If you have any additional questions, please contact one of our local Mortgage Loan Officers.