First time homebuyer and the loan process

Published on May 4, 2023 under First-Time Home Buyers

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As a first-time homebuyer, the loan process can be challenging with many tasks and requirements. Rest assured, it's not as intimidating as it may seem. Purchasing your first home can be seamless if you are prepared, ask questions, and follow specific instructions from your mortgage lender. Of course, it requires a lot of paperwork but at the end of it all you have made an investment that will grow over time, and you are well on your way to living the dream of having your own home. Below are some tips on what to expect from the home-buying process.

  • First-time home buyers, as defined by the US Department of Housing and Urban Development (HUD), can get help from state programs, tax breaks, and federally backed loans.
  • Consider the type of home that will fit your needs, what you can afford and how much financing you can secure, and who will help you with this - choosing a realtor and lender.
  • Check your credit. Generally, to qualify for a home you need good credit and a history of making payments on time.
  • Your finances. Making sure you have sufficient funds for a down payment and closing costs
  • Down Payment assistance. If you do not have 20% in down payment funds then ask your lender for the down payment assistance programs that they can offer. Many first-time homebuyer programs offer minimum down payments as low as 3% to 5% and a few require no down payment at all
  • Home Inspection. Even if the home you are considering looks flawless, make sure to have a trained professional inspect the properties quality and overall condition
  • Appraisal. Lenders require that the home be appraised.
  • Title Search. Lenders will do a title search to make sure there is no one else other than the seller tied or can claim the property

Once you have chosen your lender and started your application, you will need to make sure you have the following items to provide to your lender:

  • Two most recent consecutive paystubs
  • Two most recent years' W2s, and tax returns
  • And the two most recent checking/savings/portfolio statements showing your available funds for a down payment and closing costs
  • Depending on your loan program you may have additional tasks or need provide additional paperwork, such as taking an online homebuyer class and providing a certificate from that course

It is imperative that you keep your funds as still as possible during your loan process. The more you move your money around the more paperwork you will need to provide to your lender. Be sure to not alter your credit in any way during the process. Such as financing a car or obtaining a new credit card for any purchase. Refrain from running up any current credit cards. After your lender reviews all your documents, credit, and finances you will be ready to sign your closing papers.

Buying your first home can be strenuous, that's why it's important to educate yourself and follow your lender guidance to make this process as smooth as possible.

Contact an Expert Loan Officer