Buying your first home can be one of the most exciting and fulfilling events in your life. But it can also be a bit intimidating, especially when you aren’t sure what to expect. The following are a few things every first-time buyer should know before starting on their homeownership journey.
1. Plan Ahead
Every lender requires documentation from borrowers to show they qualify for a mortgage. The specific documents may vary depending on the borrower and the lender. But at the very least, you can expect to provide one month of pay stubs, two years of W-2 forms and tax returns, and statements of any bank accounts you’ve had during the past two months.
You’ll also be asked about your monthly expenses, including rent, and will need to provide contacts for your landlord and employer. If you’re self-employed, you’ll be asked to provide bank statements for the past one to two years, as well as profit and loss statements. It can take time to gather these documents, so it’s best to start early.
2. Get Pre-Approved
Many first-time buyers make the mistake of shopping for homes and falling in love with one, only to discover it’s out of their price range. That’s why it’s so important to get pre-approved by a lender before you start shopping. Knowing what you can afford to buy is key. Plus, a pre-approval letter shows the seller of your future home that you’re a serious buyer and that their home is within your budget.
You can get pre-approved by sharing some basic information about your income, assets and debts with a Right By You Mortgage loan officer, who can tell you whether you qualify and what types of loan programs may be available to you. Once you’re pre-approved, you’ll get a pre-approval letter that you can submit with your home purchase offer.
3. The Loan Application Process
Once you find a home and have your offer accepted, it’s time to fill out your loan application, which you can do online at home or with the help of your loan officer.
After filling out your application, you’ll receive a Loan Estimate that breaks down the estimated costs and fees that come with your mortgage, as well as any state and federal disclosures that are required in your area. This is also when you’ll be able to lock in the interest rate on your loan.
At this stage, your lender will order an appraisal on the home you’re buying as well as a title report to make sure there are no liens against the property. As the lender’s underwriter reviews your file, there’s a chance you may be asked for more documentation. If this happens, make sure to provide the additional documents as quickly as possible to avoid any delays with your loan.
4. Closing on Your Loan
After you’ve satisfied all the lender’s requirements, the underwriter will issue a final approval and set a closing date for your loan.
There are still a few final things to handle. About three days before closing, you’ll receive a Closing Disclosure, which re-verifies the fees you’ll pay and shows what your monthly mortgage payment will be. You’ll also find out how much cash you’ll need to close your loan. Shortly before the closing date, you’ll be instructed how and when to submit those funds.
How long does this whole process last? With many lenders, it can take as much as 45 days or longer. But at Right By You Mortgage, it typically takes fewer than 30 days—and sometimes as little as 15 days. Even better, we guarantee an on-time closing!
If you’re thinking about buying your first home and are looking for trusted expertise, we encourage you to reach out to us at 1-877-552-2242 or drop us a note at firstname.lastname@example.org. We’d love to make your homeownership dreams come true!