First Time Home Buyer Basics

download (62)If you have been renting for years, unfortunately you have nothing to show for all the rent money you have given to your landlord. Due to the benefits of homeownership you may be considering purchasing a home. There are a variety of advantages that homeowners enjoy as compared to renters. These advantages include: tax deductions, appreciation, control over their property, and stability. Before buying a house you should consider how home-ownership will affect your employment, family, and financial situation. Once you have weighed the pros and cons of purchasing a house, if you decide to become a homeowner the following steps will help you prepare.

Step One: Get Pre-Approved For a Mortgage

Talk to your family and friends and ask them to refer a mortgage professional that they have had a good experience with. You will need to provide your pay stubs, bank statements, tax returns, and other personal information to your mortgage lender. Often being able to meet face to face with your mortgage loan officer will reduce stress and will help you stay better informed during the loan approval process. Make sure that you apply for a fully underwritten mortgage pre-approval. Many lenders will just pre-qualify individuals for a mortgage. A pre-approval will take longer to complete, but it will eliminate unforeseen issues such as: verified funds, past credit issues, and other potential problems and delays.

Step Two: Look For Your New Home

Once again, you should talk to your family and friends and ask them to refer a licensed real estate professional that they have used in the past. You may spend a lot of time discussing home options and looking at potential houses with your real estate agent, so it is important to be able to rely and trust their opinion and expertise. Knowledgeable real estate agents should be able to listen to your wants and needs in a house; then be able to honestly tell you what you can afford and the areas you can find the most house for your budget.

Step Three: Formal Loan Processing

Prior to signing your purchase agreement and submitting your offer through your real estate agent, you should contact your loan officer and ask for a loan estimate. The loan estimate is a detailed breakdown of your costs to close and monthly payment on the house you are considering purchasing. Ask your lender for a reasonable closing time frame and make sure your real estate agent writes in an appropriate closing date in the purchase agreement. Thorough communication will typically eliminate confusion and frustration during the mortgage process. At this point, time is of the essence, so when your lender asks for additional information, try to provide it as soon as possible. If you are unsure why the additional information is needed, ask for an explanation of why it is required, but provide the information in a timely manner.

Step Four: Closing

Once your loan is approved, you should receive a closing disclosure from your lender or the title company. Usually this disclosure is emailed to you and then must be e-signed before your closing appointment can be set. Lenders are also required to have the closing disclosure signed at least three days prior to the closing papers being signed. Once the closing papers are signed, the loan can officially file at the courthouse, which transfers the house into the borrower(s) name.