Feb

Home Buying Process for a First Time Homebuyer

When the time comes to buy your first home you will most likely have conflicting feelings about the home buying process. Looking for the perfect place to call home is an important and exciting time in your life. Before you can get the keys to your first home you have to go through several steps, some of which can be confusing or downright intimidating. One of the most important steps is securing money to purchase your home. The loan process can be complicated therefore learning as much as possible beforehand will reduce the chances of making a costly mistake. Here we look at the loan process for first time home buyers.

Determine how much home you can afford – This is not an official step in the loan process, but an important step nevertheless. Avoid putting yourself in a position where you are house poor by buying a home that you can afford. Lenders consider many factors when determining how much credit they are willing to extend, however no one knows your financial situation better than you- determine a number you are comfortable with and stick to it, even if the lender approves your loan for a higher amount.

Compare loan terms – Finding the right lender and loan is just as important as finding the perfect home. Buying a home is a huge investment and one that should be taken very seriously. Take the time to compare lenders and loan terms to find the best loan. Begin with a checklist of potential lenders including their name, address and contact information. For each lender you will want the following information; type of mortgage, minimum down payment, interest rates and points, prepayment penalties, closing costs and length of time to process loan.

Loan application – You can fill out a loan application in person, over the phone and sometimes on the Internet. The loan officer will ask you about your employment, income, savings and debt. The loan officer will also request proof in the form of pay stubs, W-2′s and tax returns. Your credit will be checked to determine creditworthiness. When filing out the loan application make sure all requested information is provided to ensure the application is processed without delay. Incorrect or incomplete applications could result in being turned down for a loan.

Processing the loan – Once you have completed the loan application it will then pass from the loan officer to the processor. Their job is to make sure all the paperwork is in order and all requested information and documentation is complete. The processor basically reviews all the information that you went over with the loan officer, verifying information and comparing numbers to determine whether you qualify for the loan.

Underwriting – Next your loan application will be reviewed by the underwriter. The underwriter checks the work of the processor. They will go over all the information on the loan application once again to ensure everything that is needed is present. A second look at the numbers by the underwriter will confirm whether or not your loan will be approved. If you have met all the conditions of the loan and provided all the necessary documentation your loan will be approved.

Closing and settlement – When the loan has been approved it will then go to closing. This is when the lender contacts the title company to begin the paperwork needed for settlement. At this stage funds are made available for the purchase of the home and settlement is scheduled. Settlement is the final step in the loan process. Everyone is present the buyer, seller, real estate agents and settlement attorneys. During settlement both the buyer and seller go over a settlement sheet to ensure the numbers are correct and as agreed. If all steps of the loan process have been followed, there should be no last minute issues or problems. This is the last step in the loan process.