Buying your first home can be a very intimidating life event. However, there are things you can do to make it less nerve racking and more of what it should be…fun and exciting. The best way to eliminate fear is through education, so obviously the first step is already being taken if you’re reading this. As a first time homebuyer, here are some things you should understand:
Talk to a lender who will take the time to explain the loan process
I’m going to assume that the most intimidating part of buying your first home for most people is the 30 year mortgage (most likely) that you will be agreeing to. Sounds scary, right? Wrong, because the first step in this process is talking to a lender who will take the time to sit down with you and explain to you everything you need to know about mortgages and how they work. If you do this, you will have the comfort level and confidence you need when making an offer on a home with your Realtor®.
I won’t bore you at this point with all of the different mortgage options that are out there and the guidelines and requirements that go with them, but what I do want to do is talk to you a little bit about the pre-qualifying process and what you can expect when going through that.
THE PRE-QUALIFICATION PROCESS
Fill out an application for a loan
The first thing you will need to do when meeting with your lender is fill out an application. This can be done a few ways; it can be done via a phone conversation, an online application, or the old fashion way of making an appointment and doing it in person. All of these ways are equally effective, and with so many means of communication, whichever of these fit best into your schedule is the way I would recommend.
Pull credit and look at income
Once your mortgage advisor has all of the information needed it’s time to pull credit and look at income. Credit profiles and income are the biggest determining factors in getting pre-qualified for a loan. There are still loan types out there that don’t require a down payment, but there aren’t any mortgage products that don’t require a credit score and income evaluation. Since this is the most crucial part of getting your pre-qualification, you will need to provide some needed information that I will describe later.
Discuss which loan types are best for you
Once a thorough review of your credit, income and assets are completed by the mortgage advisor, it is time to discuss which loan types are best for you. This is the point where the discussion turns to down payment options, mortgage insurance discussion and explaining closing costs…what they are and how they are paid.
Once you have decided what mortgage type suits you best and the mortgage advisor determines you’re eligible, you are now pre-qualified and ready to start shopping!
THE LOAN PROCESS
After you, with your Realtors® help, find a home and successfully negotiate a contract, that is when the actual loan process begins. Getting through the loan process should now be a lot less intimidating because you have already taken the proper steps in the prequalifying process. Here are a few of the things you can be prepared to give to your mortgage advisor at the initial prequalification:
- Last 2 years tax returns with all W2’s and 1099’s
- Most recent pay stub for all borrowers
- Most recent 2 months bank statements
This may not be all you need to provide, but this is the starting point. If you have any questions please contact me.
Special thanks goes to guest author Ron Ross at VBS Mortgage in Harrisonburg for this post! More about Ron:
Ron has lived in the Harrisonburg/Rockingham County area since 1988. He enjoys spending time with family and the many friends he has made since his family relocated here from Richmond after growing up in Ohio. His favorite activities are playing golf, softball, and basketball. He has 2 grown children, one of which is a freshman at JMU. He has been a mortgage advisor since August of 2004 and has navigated the many changes the market has thrown his way since 2008. He absolutely loves his job of helping people with what is usually their biggest financial decision.