Mortgage 101: What to expect as a first-time home buyer

by Reliant Home Funding /

May 21, 2021

It’s a big milestone in your life, becoming a homeowner. For many, it’s one of their biggest investments. It can be intimidating like many first experiences, but with the right resources it can be a straightforward process. Deciding you’re ready to purchase a home is the first step. Once you are committed to finding your dream home it becomes essential that you figure out what you can afford. Then it’s time for the fun part of getting a mortgage. In this article, you’ll be given a head start on what to expect when purchasing your first home. It will take you through the mortgage process and give you an idea of what you need to get started.

Evaluate Your Finances

First, decide if you are ready to make the investment. Do you have money saved? Do you have a source of income? What sort of debt do you have? Do you have any idea of your credit score? These are some questions to ask yourself when making the commitment. You want to have money saved for the down payment, closing costs, moving expenses, and even after the mortgage loan process, some savings in case of an emergency. Other requirements that lenders look for are a source of income so they know how you will fund the mortgage. Knowing your credit score is important because you can give yourself time to improve it if necessary. Once you have an idea of your financial situation, you can get started on the first step of your journey by getting pre-approved.

Get Pre-Approved

Mortgages begin with the pre-approval process. Pre-approval tells you what loans you qualify for and notifies lenders that you are a serious buyer. Your mortgage lender will look at your credit score, source of income, and assets to see what you qualify for. Documents that you will want on hand are your W2s, pay stubs, tax returns and bank statements so you can move forward through the process. It is also helpful to have an idea of what loan options are available to you. Some examples are FHA, conventional, VA, ARM, fixed, and renovation loans. You can check out our Compare Loans page under Resources for more information on the specific loans. There may be first-time home buyer programs available to you as well. It is worth asking your loan officer what you will qualify for. Once you are pre-approved you can begin your search for your dream home. After your home is chosen, you and your loan officer can move forward on to the mortgage application.

Initial Disclosures

After the pre-approval and home search, the mortgage application begins with initial disclosures. Your loan officer will send you the document outlining the initial terms, as well as federal or state disclosures for you to sign. The next step for you, as the borrower, is to make sure your documents from pre-approval are up to date and accurate, such as your W2s and pay stubs. Once the application is processed, the appraisal will be ordered by your loan officer and the underwriter will review your application. The underwriter will approve your application, but with conditions that you and your loan officer will work to clear. Some examples of these conditions could be proof of mortgage insurance or reviewing the title report. Once conditions are met you are clear to close. Similar to the initial disclosure, you will have a closing disclosure sent to you 3 days before closing to review the details of your new loan and get the approximate closing costs outlined. Lastly, the day you have been waiting for is the closing day where you get to say you are a homeowner!

Inspections & Appraisals

During the mortgage process there will be a variety of costs to you as the buyer. You will want your house inspected to make sure it is safe to live in. Another cost is the appraisal, which you want to be fair and accurate to the purchase price. Homeowners insurance, property taxes, closing costs, and private mortgage insurance are some other items to be aware of as a first-time home buyer. After closing there could be additional costs to consider, such as costs of utilities, moving, and maintenance. Stay-tuned for a Mortgage 101 article on what expenses to expect when owning a home. 

We’ve just gone through the process of your first mortgage. You’ve made it to the end, and you can say you have a basis of what to expect as a first-time home buyer. It’s important to know you are not alone in the process. We at Reliant Home Funding want to make your first mortgage experience as clear and seamless as possible. Get started to begin your homeownership journey

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