Buying your first home can be a very stressful time as it is likely the largest decision you have made in your life. In our experience, the following questions are some of the most commonly asked by first-time homebuyers.
What is the benefit of buying, as opposed to renting?
Buying a home is an investment. When you write a check to pay off your mortgage every month, you are essentially investing it in the home. Over the years, there is a chance the value of your property will rise, increasing the value of your investment. Whereas with renting, you never see a cent of your monthly rent check again.
How much money will I need to buy a home?
The exact amount of money you will need to buy a home depends on the type of loan you end up choosing. You can, however, expect to pay the following three costs at the closing:
- Down payment – a percentage of the home’s price (some loans require as little as 3% down)
- Closing costs – costs associated with processing paperwork
- Prepaids – costs such as property taxes, homeowners insurance, and mortgage interest
Keep in mind, there are additional costs that will need to be paid for in advance. Some of these costs include appraisals, home inspections, and earnest money. Earnest money is the deposit you make when you submit an offer on a home. After your offer is accepted, the amount gets credited to your cash at closing.
How do I know how much I can qualify for?
While there are many mortgage calculators available online, they aren’t ever as accurate as getting pre-approved for a loan. One of the biggest advantages of getting pre-approved before you begin house hunting is that you know what you can actually afford. And the best part? A pre-approval doesn’t lock you into doing business with that lender, nor does it mean you have to buy a home within a certain amount of time.
How do I find a lender?
You should treat shopping for a loan just like any other large purchase. If you take the time to shop around, you will most likely end up having a better experience. Plus, not all lenders are able to offer the same interest rates, meaning you shouldn’t just go with the first one you meet with.
Take some time to consider all the factors of a mortgage. Price is important, but so is the quality of customer service. We suggest taking the following steps to evaluate each lender:
- Compare rates and fees
- Look through testimonials and reviews
- Ask a trusted real estate agent about the lenders’ professional reputations
- Evaluate communication levels
What do I need to actually apply for a mortgage?
In order to apply for your mortgage, you will need the following documents:
- Paycheck stubs for the past 30 days
- Two years of W-2 forms
- Two months of checking and savings account statements
- Copy of your driver’s license
- Two years of federal tax returns (if self-employed or own rental properties)
- Last quarterly retirement and investment statements (possibly needed)
Ready to start the mortgage process? Our online application takes anywhere from 5-20 minutes to complete and we can have you pre-approved for a loan in just a few hours.