Before you start ravaging the internet for the cutest homes in your area, take some time to learn a little bit more about the home buying process and what you can expect.
Here are the steps you will want to take before you start shopping for your first home:
1. Check your credit
Before you do anything, request a copy of your credit score and history from each of the three credit bureaus. This can be done for free at www.annualcreditreport.com.
The information on that report can really help you when you talk with your mortgage officer. It’s a good idea to take a look at your credit once every 12 months to make sure there aren’t any inaccuracies in your report.
2. Get mortgage pre-approval
Next, decide which mortgage product is the best fit for your needs, then shop different lenders to see the one that has the best terms. Mortgage brokers can be particularly helpful here, since they work with many different lenders, and shop your loan around to find the best deal.
In order to get your official pre-approval letter showing sellers you are a serious buyer, you’ll need to show these documents:
Two years of W2s
Pay stubs for the past two months
Bank statements for the past two months
Two years worth of tax returns
Profit and loss statements for self-employed individuals
Bankruptcy or divorce paperwork (if applicable)
Many lenders now have automated systems in place to help with the gathering of these documents.
Getting the pre-approval letter is an important part of this process. It will make any offers you make on potential homes more powerful, because it shows that your financial details have already met the minimum standards required by your lender, and barring any complications during underwriting, you’ll likely be approved for funding.
3.Find an agent
Find a great real estate agent who is skilled at working with first-time buyers in your area. Your mortgage broker regularly works with tons of different agents, and is well versed on which ones will know your target neighborhood best. First time buyers, veterans, and high-end home buyers will appreciate this type of expertise in negotiating contracts.
Your agent will help walk you through the process and explain what comes next.
4. Narrow down your location
Finally, before you start shopping, narrow down the area you want to live in. Consider factors affected by location like:
Make use of real estate apps and other helpful tools to stay organized, and research home values in the area. Remember, this is probably not the last home you’ll own. It’s a start, and a stepping stone to build your future equity on.
Keep your home buying needs vs. wants list in mind while you shop, so you can maximize your purchasing power and keep expectations in check.
6. Make an offer
When you find a home you like, your agent will help you make an offer. The offer will state your terms for the home purchase, the type of loan you are going to use, and any seller concessions you’re asking for.
Now is the time for underwriting, appraisals, and inspections. There’s a lot of waiting around during this time, and it might seem like nothing is happening sometimes, but a lot is going on behind the scenes to push your loan through.
TIP: Ask your mortgage advisor about the do’s and don’ts of escrow, so you don’t accidentally sabotage your home loan by making a move your lender wouldn’t approve of.
9. Close escrow
As the closing date nears you will bring the funds for any closing costs and down payment required by your lender, and sign the official papers to take ownership of your home.
After you sign the loan documents with a notary, your lender will satisfy any last remaining conditions and then your file will be released to record with the county. Once the file is recorded with the county, you are officially a homeowner!
...are you ready for the next step?
10. Schedule a consultation.
It's as easy as scheduling a quick call or meeting with one of our mortgage advisors. In a few minutes, you'll know what you can afford, and how to proceed.
Empower yourself with knowledge to make smart decisions. These helpful tools and resources will help you enjoy the process of getting a home loan, and feel confident in your financing choices.
Point Equity Residential Lending, NMLS ID 1404205; www.NMLSConsumerAccess.org. Main Office located at 925 Highland Pointe Dr. Suite 330, Roseville, CA 95678. Telephone Number: 916-248-4620. Equal Housing Lender. Licensed in CA by Dept. of Business Oversight under the CA Finance Lenders Law, 56023, and the CA Dept. of Real Estate under the CA Real Estate Law, 01987090. Information, rates, and programs are subject to change without notice and may not be available in all states. This is not an offer to enter into an agreement. All products are subject to credit and property approval.
All information contained herein is for informational purposes only and, while every effort has been made to ensure accuracy, no guarantee is expressed or implied. Any programs shown do not demonstrate all options or pricing structures. Rates, terms, programs, and underwriting policies subject to change without notice. This is not an offer to extend credit or a commitment to lend. All loans subject to underwriting approval. Some products may not be available in all states and restrictions apply. Equal Housing Opportunity.