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Buying your first home can be an exciting yet stressful endeavor. After all, it is one of the biggest purchases you will make in your lifetime and if you're not familiar with the process, it can be a little intimidating. Understanding the steps involved will help you navigate through thinking about buying a home to closing the deal. Below, you will find a helpful checklist that will keep you moving forward and in a timely manner.
Get Pre-qualified by a Loan Officer
Pre-qualification by a loan officer will help you determine the amount of mortgage you can afford. There are various elements of your finances that a loan officer will analyze in the pre-qualification process.
Income
Loan officers will consider the type of work you do, your work history, and the stability of your position. They will also look at your debt to income ratio to determine how much you qualify for. This formula looks at your current income versus your current debt.
Credit History
Your credit history is another factor in pre-qualification because past credit history gives an indication of future performance, Make sure that you are current on credit payments and if you have less than stellar credit, you might want to contact a credit repair agency to what your options are.
Savings
In addition to your income, debt, and credit history, your loan officer will look at how much money you have in savings. Depending on the type of loan you will use, you will likely be required to put a down payment on the loan ranging from 3% to 20%.
Find a Real Estate Agent
It is wise to enlist the help and expertise of a real estate agent. A real estate agent works for you and has the tools available to find homes that are not only in your price range but also features the things you want in your first home. They can negotiate price, closing cost with the seller and walk you through the home buying process, making sure you are getting the best deal.
Start House Hunting
Once you have a real estate agent representing you, the fun part begins, finding your dream home. Your real estate agent will listen to your wants and needs in a home, location, and cost range and begin to search the market to find good fits. You will then begin viewing properties and decide on the home you like.
Making an Offer
When you decide on the home you desire, the next step will be to make an offer. Your real estate agent will help you in determining a fair price to offer. Factors in determining a fair price can include if it is a seller's market or a buyer's market, how long has the home been on the market and what price did other comparable homes in the area gone for within the past 6 months.
Submit Your Mortgage Application
If your offer is accepted, you will then need to submit your mortgage application. Remember, your pre-qualification was only to determine how much you could afford. Now it is time to see if you qualify for a mortgage loan. Gather the following items ahead of time because it is likely that your loan officer will ask for them.
- W-2 forms from the past two years
- pay stubs from the past 30 days
- proof of other income sources
- Federal tax return from the past two years
- recent bank statements
- details on debt such as student loans or car loans
- ID and social security number
Close on Your Home
Make sure you get familiar with the standard closing documents and closing costs ahead of time. You should know what you will owe before you sit down to sign the loan. Some of the closing cost is negotiable and you will want to know what these items are before closing.
Congratulations, you're a homeowner! First Savings Mortgage would like to help you through the loan process of buying your first home. Contact us today and let our professionals guide you to owning your first home.