Most first time homebuyers use a mortgage to buy a home, so it makes sense to talk to a loan officer before you start your search. That way you can find out what you can qualify for and how much money you will need to purchase a home.
The first question is how much can I afford – or how much can I get approved for. They may be two different answers. You may be able to qualify for more home than you honestly are comfortable with and that's ok. You may have expenses that are not taken into consideration when your approval is done – things that do not show up on a credit report but you know are there. It could be hobbies that take extra cash or even daycare expenses. Maybe you know you are going to replace your car in the near future and want to make sure you can afford a car payment that you do not have now.
You can talk to a loan officer and get a pre-qualification or a pre-approval – they are two different things. A pre-qualification means you have talked about your situation, but the loan officer has not run a credit report (or maybe just pulled credit, but didn't run an approval). It is very vague and there are frequently changes made before you get your actual approval. A pre-approval means that the loan officer has checked your credit and also looked at income and asset documents. They have also run an approval through an underwriting system.
Once you are approved, you will want to work with realtor. Real estate agents are a wealth of knowledge and will help you in your home search. They have access to more information that can help you make a good decision on a home for you. Remember as a buyer, typicaly the seller pays the real estate commission. It will help you to have your own representation as you are making your home purchase.
Once you find a home, make sure you get a home inspection. The inspector will go over the entire home and give you a report. That report will help you make any decisions about possible repairs that you want done. Remember that you are buying a home that has been lived in, there may be cosmetic repairs but those are usually things you can do. You want to know if there are major issues that need to be fixed before you buy the home.
You will need to get a homeowners insurance policy. This is a good time to compare insurance companies and get a quote for car and homeowners insurance. You will need a insurance binder for closing and the first year of insurance needs to be paid at or before closing.
Just before closing you will do a walk through the home to make sure that everything is still the way you originally saw it. There are times that things happen between the time you write your purchase agreement and go to closing. If there are major changes, your realtor will discuss the issues with the sellers realtor.
At closing you will sign many forms, but at the end of closing, you will get keys to your new home! It can be a stressful process, but also a very exciting time! Make sure you ask your realtor or your loan officer any questions that you may have. It's an everyday process to the realtor and loan officer, but you don't buy a home everyday!
Leslie Vanderwerf, NMLS ID#335509, American Mortgage & Equity Consultants, NMLS#150953 – Email – Website
