Here are the steps you will want to take before you start shopping for your first home:
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.
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:
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.
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.
Finally, before you start shopping, narrow down the area you want to live in. Consider factors affected by location like:
Now you’re ready to start shopping.
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.
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.
Your realtor can help you decide when it’s smart to ask for seller concessions, and when it’s better to leave them out, depending on the temperature of the real estate market, and number of other offers the house may have.
The seller then has the option to accept, reject or offer a counteroffer. Often you will go back and forth a few times with the seller before you come to an agreement.
After you and the seller come to an agreement and your offer is officially accepted, you are considered ‘in contract.’ You will set a date to sign on the dotted line and close the deal.
Congratulations! You are now in escrow.
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.
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?
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.
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