First-time Homebuyer Guide
If you’re like most first-time homebuyers, you’re unsure of where to start. The good news is that I'm here to help. I’ll walk you through the steps you’ll take to go from “tenant” to “homeowner.” Let’s get started.
Step 1: Find out how much you can borrow
Before you begin house hunting, the very first step in obtaining a loan is to determine how much money you can borrow. It’s easy to determine your buying power, based on standard lender guidelines, by answering a few simple questions.
Getting pre-approved before you start looking for your house is recommended because it allows you to look for properties within your range, be in a better position when negotiating with a seller who knows your loan is already approved and helps you close your loan quicker. Pre-approval requires verification of your income, credit, assets
If you’re unsure of how much house you can actually afford, use this mortgage calculator to estimate your payments.
Step 2: Select the right loan program
Home loans come in many shapes and sizes. To choose the loan that makes the most sense for your financial situation and goals, it helps to understand the benefits of each.
There are two basic types of homes loans and different reasons why you’d choose each. Let’s compare.
Fixed Rate Mortgage | Adjustable Rate Mortgage |
Plan to live in your home more than 7 years | Plan to stay in your home less than 5 years |
Like the stability of fixed principal/interest payment | Don’t mind having your monthly payment periodically change |
Don’t want to run the risk of future monthly payment increases | Comfortable with the risk of possible payment increases in the future |
Think your income or spending will stay the same | Think your income will probably increase in the future |
Step 3: Apply for a loan
Once you’ve selected the loan that matches your current situation and future goals, you’re ready to apply for a loan!
Step 4: Begin loan processing
Although lenders conform to standards set by government agencies, loan approval guidelines vary depending on the terms of each loan. In general, approval is based on two factors: your ability and willingness to repay the loan and the value of the property.
Once your loan application has been received, the loan approval process starts immediately. All of the information you have been given will be verified by a loan process and, if any discrepancies are found, either the processor or myself will troubleshoot to straighten them out. Learn more about this information here.
Step 5: Close your loan
After your loan is approved (congratulations!), you’re ready to sign the final documents. You will review all documents, your information and make sure interest rate and loan terms are what you were promised. This step normally takes place in front of a notary public. Here’s what you should bring:
So, what’s next? Your loan should close shortly after you have signed the loan documents and you’ll be on your way to home sweet homeownership.
Ready to get started?
Toolbox and Homebuyer Resources
