Many first-time home buyers ask themeselves the following question:
Where do I start? Buying a home can be a daunting task for first-time home buyers. The first step in purchasing a home should be to determine if they can afford a home. What many first-time home buyers do not realize is that there are many other costs to owning a home besides the monthly payment. They should speak with a family member or friend that owns a home and ask them what other costs they pay besides the monthly payment. This will help them get a good idea of all the costs involved with owning a home.
Since credit profile is an important underwriting criterium, it may be a good idea to obtain a copy of your credit report before the actual house hunting to see what your credit scores are. It will take time to correct any mistakes or credit blemishes on the credit report. Being prepared and proactive can save thousands of dollars by way of a lower interest rate.
When meeting with your loan officer to start the mortgage process you will be required to complete a mortgage application, along with providing supporting documentation that can include pay stubs, w-s2, tax returns, and bank statements.
If you have ever had a bankruptcy then I would strongly suggest that you have a copy of your bankruptcy papers and your discharge papers ready for your loan officer when you are getting ready to start the loan process. The more necessary information that you have at the beginning of the loan process the faster your mortgage transaction should go and the quicker you should be able to close on your home loan.
The application that the Loan officer is going to fill out with you gives the lender a bird's eye view of all your credit, income and asset history. The documenation that has to be provided is all the proof of what you put down on that paper. You must be able to show with documenation everything that you specified on your application. This would be your paystubs to prove income, your ID's to prove where you live, a Verification of Rent or Mortgage Statement to prove how long you have lived in a particular place.
It is always best to give more documentation than is necessary to your loan officer. Not only does it help with all the requirements that must be fufilled in order to get your loan done, it will even speed up the process.
If your meeting is over the phone, make the request to your loan officer that they email/fax the documents and details over to you beforehand so that you can both look at the numbers at the same time. It's much easier to have the numbers in front of you and discuss them than to try to remember all of the particulars as you discuss them over the phone.
It is a good idea to review your budget and determine how much of your income you can afford to spend on your mortgage payment. This will help your lender determine how much home you can afford to buy.
There's a lot of documentation to gather, and the task may seem daunting. But with the help of an experienced mortgage loan professional, the process is narrowed down to YOUR specific needs. This is usually determined through specific questions during your initial interview.
Many federal and state laws are in place to protect you as a consumer. These laws further require banks and mortgage brokers to disclose to you your rights. As proof of having done so, your loan officer will need you to sign various federal and state disclosures, which is then made a part of the mortgage loan application package.
Planning a budget before you begin looking to buy a home is a very important task. Many times people can qualify for mortgages that are much higher than what they can comfortably afford. By accepting a mortgage that is higher than what you would like to spend, you may have to change your lifestyle from what you are used to and you may end up living pay-check to pay-check instead of comfortably. Knowing the maximum that you want to spend on your monthly mortgage payment and the type of mortgage loan you want (ie: fixed vs. adjustable) can help you continue to live the way you are used to without having to sacrifice the luxuries you are accustomed to. When budgeting your money make sure you include estimates on what the property taxes and homeowners insurance payments will be on your new home as well. Your mortgage professional can help you work on your budget to make sure you buy a home that you are comfortable with and to make sure you have considered all expenses involved with a mortgage.
Also be sure to compare what bills you are currently responsible for versus what you will have to pay yourself once you buy a home. For example your water, cable, electric and garbage bills may be included in your monthly rent payments. When you buy a home these will be expenses above and beyond your mortgage payment. Of course if you are already making these payments yourself the shock will be minor.
Once you have met with a loan officer and have determined a purchase price with a comfortable monthly payment, its time to look for a Realtor. When talking to prospective agents you should pay closest attention to their experience and attitude. Is your agent trustworthy? Will they show you homes in your price range, or insist that you see larger or more expensive properties? Can they tell you about the local school system, your drive time to work, and where to get a good burger? Also look for the ABR designation. This means your agent is an Accredited Buyer's Representative and specializes in helping buyers.