A front lawn’s ‘For Sale’ sign catching your eye, touring available properties, and attending open houses—the search for your first home can be exciting. It can also be a bit intimidating. There’s some confusing real estate and mortgage terminology, lots of decisions to be made, and a large financial commitment at the end of it all. With some basic information and a smart plan, you can get through the financing and purchasing of your first home, and onto unpacking all those boxes!
Your very first step—long before looking at homes, picking out paint colors, and deciding on your style of décor—should be coming up with a realistic budget. Everyone’s budget is different, and first time home buyer budgets vary immensely based on income, age, financial security, number of buyers, area of the country, and propensity for financial risk among other factors.
The amount you can borrow will also be limited by the terms of the mortgage program you apply for, with many programs allowing a monthly mortgage payment to be no more than 28% of gross monthly income, and the total of all debt payments to be no more than 36%.
Which is the right home for you? Many factors will likely come into play when making this decision. Consider your budget, preferred location, the style of home you like, the amount of space you need, and your favorite features in a home.
There may be several property types available depending on your location.
Before you begin your search for a house, it makes sense to get e-approved for a mortgage. This will help you determine a price range for your search and whether you are likely to be approved for the loan amount you’re interested in. This will also make you a stronger buyer in the eyes of sellers and their real estate agents because you’ve already had your financial history verified in the process and a mortgage professional has established what price range fits your personal budget . To get started, simply call 800-634-8616 to speak with an eLEND mortgage consultant.
Once you have a property under contract you’ll be ready to submit a full application for a purchase mortgage. You and your mortgage consultant can do much of the preliminary work ahead of time, such as identifying which loan program fits your income and gathering supporting documentation, so that once you have a purchase contract in hand you can hit the ground running.
After your application is submitted, a whole team (including you) will be at work moving the loan towards approval. The mortgage consultant and loan processor will work together to complete the other aspects of the application, ordering an appraisal of the property, conducting a title search (looking for undisclosed liens on the property), and more. You will need to arrange for homeowners insurance, and dependent on your region, possibly flood, wind and hail, earthquake, or other specialty coverage. You may also be asked to provide additional information such as more current bank statements, an explanation of where a certain deposit came from etc. Try to obtain these documents quickly, as most purchase contracts specify a time frame within which closing must take place.
This is where you sign the documents finalizing both the purchase and the mortgage financing. Depending on where you live the closing might take place at an attorney’s office or with an escrow agent. Be sure to ask questions about anything that is unclear. After closing, you generally receive the keys to your new home. Now you can celebrate becoming a homeowner!
If you have any questions about the mortgage process of buying your first home, give eLEND a call at 800-634-8616.