Purchasing a home can be an exciting and rewarding experience, but at times it can also feel a little intimidating or confusing, especially if you’re a first-time home buyer. Obtaining a mortgage might seem like a daunting task, and you may have questions surrounding the home buying process. Have no fear – we’ve broken down the steps for you in this guide that will help you gain confidence in embarking on this new financial journey.
Step One: Get Pre-Approved
The last thing you want to do is fall in love with a home outside of what you can afford. By obtaining a pre-approval first, you can get a clear vision of what fits within your budget to make your shopping experience easier. A pre-approval also provides you with purchasing power during the negotiation process. It shows the home seller that you’re serious about the home and that you’re ready to move forward with an offer if the price is right.
Step Two: Shop
This next step is a fun one - it’s time for you to start shopping! Take your pre-approval letter and hit the ground running. Look in areas you would like to reside, keeping your pre-approval limit in mind. Spend some time researching homes on the Internet. Be mindful of home details that might interest you or cause you to look the other way, such as the water and sewer line setup, the need for renovations after you purchase, and the size of the overall property or the home itself. If you’re ready to take the leap, make an offer! Be prepared to have some back and forth negotiations with the seller, which is normal in the home buying process.
Step Three: Apply for Your Mortgage
The application phase of the home buying journey is an important step in the process. Your lender will gather information about you and any other applicants, as well as information about the home you’ve chosen. You will need to provide your lender with certain documentation to verify income, assets and employment. Requirements may vary, but be prepared to submit W-2 forms, recent paystubs, and bank statements for all of your financial assets. It’s also possible that you may be asked to submit recent tax returns, especially if you own your own business. Because it may take some time and effort to obtain these documents, it is recommended that you begin gathering these items early in the mortgage process to avoid any surprises down the road.
Step Four: Appraisal and Inspection
Once you have found the house you would like to purchase and the seller accepts your offer, it’s time to have the home value estimated. An appraiser will evaluate the market directly around the home you are looking to purchase in order to determine the current value. They will take several things into consideration when determining the value, including how much other homes in the area have sold for, the condition of the home itself, and the size and location of the property. Your mortgage cannot exceed the appraised value of the home, so this number is crucial in the home buying process. The home will also need to be inspected to ensure there are no major issues with the property or problems lurking that neither you nor the seller are aware of.
Step Five: Final Approval
After your dream home is appraised and inspected, your loan application will go through the full underwriting process and you’ll obtain a final approval. Your lender will review your application along with any supporting documents you have provided. Once you are approved, you will receive the details about your mortgage rate, monthly payment and closing costs, including a deposit amount (if required). You’re almost a homeowner now!
Step Six: Closing
Once you receive your final approval, your lender will schedule a closing. This is where you will sit down with a lawyer to review and sign all of the documents. It may feel like the signing is endless as there can be a lot of pages! Don’t let the stack of papers frighten you - the lawyer will review them all with you and answer any questions you may have. Once you have finished signing, the lawyer will give you a copy to keep yourself, and forward the other to your lender on your behalf.
Step Seven: Funding and Moving
Finally! You have reached the end of a 45-60-day process, congratulations! The house is yours! Once you have the keys, you can decide when you’d like to move into your new home. Don’t forget to update your address with your financial institutions, the DMV, your employer, the post office, and your friends and family. You have successfully completed the mortgage process, a right of passage many strive to achieve. We’re happy to assist you in this process, and will celebrate with you every step of the way!
Dutch Point Credit Union in Connecticut is here to provide you with guidance to make the home buying process easier. Thanks to our partnership with Members Mortgage, you’ll work with a representative that can provide you with the reliable and efficient service you deserve, so you can stop worrying about financing needs and get back to thinking about how you’ll make your new house a home. You’ll also take advantage of competitive mortgage rates and terms that satisfy your needs and budget.
Let us help you save money and achieve your dreams of home ownership. Apply for a mortgage online, give us a call, or visit one of our convenient branch locations.