Essential Tips for First-Time Homebuyers
Buying a home for the first time can be an exciting adventure much like the nerve-racking experience of a roller coaster. Before you start the process of looking for a home, it’s helpful to learn about the mortgage loan process. Check out these essential tips for first-time homebuyers.
First, Be Prepared
Before contacting a lender, make sure you’re financially ready to buy a home.
- Track your spending for a few months. This will help you understand your current financial status. Make sure you can fit a mortgage payment into your budget.
- Save some cash. You may need money for a down payment. As a new homeowner, you should be prepared for emergencies and maintenance issues.
- Check your credit score. The higher your score, the better interest rate you’ll be offered for financing.
The Loan Process
There are five components of the loan process.
1) The Application
Typically, the application process involves a lengthy form that will cover your entire financial situation in complete detail. It includes the names of all parties involved, along with Social Security numbers, current address, date of birth, and current employment information. If the home has already been selected, that address will also be included in the application.
In addition, the application will contain essential information that includes:
• Balances of checking and savings accounts
• Stocks, bonds and other investment information
• Land ownership
• Retirement accounts including IRA and 401(k)
• Information on any rental property
2) Pre-approval and Processing
Pre-approval involves the mortgage lender’s commitment for issuing a home loan on a pre-selected property. During this stage, you may be required to submit additional information, depending on your financial situation and the type of home loan you are seeking. Remaining organized during this process can make the experience painless.
Near the end stage of the mortgage process, the underwriter “the company that will actually be issuing the loan” will thoroughly review and evaluate your application. This ensures that the home you want to buy is in good shape. In addition, they’ll evaluate your ability to repay the mortgage debt.
During the closing process, you’ll schedule a closing date with the title agency. Your loan expert and/or attorney may join you. During the closing, everyone involved will sign documents including the settlement statement and the mortgage note.
Once all the documentation has been signed and approved by the lender, the paperwork is sent to the recorder’s office and the deed is recorded (this typically happens within just a few business days after your meeting at the title company). Then you’re officially a first-time home buyer and will receive the keys to your new residence.
Are You Ready For Your First Home?
While the process may seem daunting, if you have good credit and follow a budget, there is a home available in your community that you can afford. The loan experts at Beam Lending love to help people buy their first homes! Fill out our form or give us a call today!