Buying and financing your first home has a lot of moving parts. There are multiple people involved, some you will talk to and many that you won’t. From an appraisal to a credit report to title insurance and more, your loan officer will make sure all the necessary documentation is included in your loan file. I have personally closed countless loan applications and treat every single file as if it’s my only one. I do this every day. But first time home buyers haven’t. First time home buyers might buy three or maybe four homes throughout their lifetimes, but it’s the first one that can be a bit overwhelming. With proper planning however, the process will be a smooth one. If you’re thinking of buying your very first home, here is your six month planner.
Six Month Plan for First Time Home Buyers
First Month. You’re committed to buy but still in the exploratory phase. Perhaps the most important thing you need to do six months out is to make sure you don’t venture out on your own. Call or come by my office and let’s have a conversation and talk about what you feel comfortable paying for a mortgage each month. I’ll go over the basic details such as payments and costs, but at this stage first time homebuyers need to get to a certain comfort level.
Second Month. If you’ve yet to do so, it’s time to check your credit report. First time home buyers usually have a pretty good idea already on where your credit stands but there can be mistakes on your credit report of which you’re not aware. Unfortunately, credit reports can be famous for errors. You can get a free copy at annualcreditreport.com. This is a free service provided by the three main credit repositories of TransUnion, Equifax and TransUnion. When you get close to submitting an application, I’ll pull a credit report we can use.
Third Month. It’s time to submit your loan application. You can do this online at my website or we can meet in my office. It’s whatever is most convenient for you. First time home buyers need to provide various documentation and paperwork. I’ll give you a list of what you’ll need to gather but essentially it’s documenting your income, employment and sufficient funds to close. This means paycheck stubs or tax returns along with bank statements.
Fourth Month. Make sure that you don’t make any sudden changes with your employment or make any large purchases as a first time home buyer. Now is the time to ‘stand pat’ financially while your loan is in process. Your preapproval letter is in your hand and it’s time to get serious about shopping for a home. And I can’t stress enough, don’t do this on your own. If you don’t have a real estate agent I can help with finding one that will be a good fit for you and an expert in the area you’re interested in. Your agent will find homes that meet your criteria and when it’s time to make an offer, it’s your agent that does the negotiations.
Fifth Month. You’ve got a pretty good idea at this point where you want to live and have visited your fair share of homes. If you haven’t checked on rates lately it’s time to reacquaint yourself with current market conditions. Interest rates will move higher and lower over time, so for first time home buyers it’s good to take another look at your preapproval and get locked in on what your payments would be using different loan options. If rates have gone up, that can affect your buying power. Conversely, if rates have fallen, your buying power just received a boost.
Sixth Month. You made an offer on a home and your offer was accepted! At this stage, things move rather quickly. I will personally orchestrate this process to make sure your loan approval is a smooth one. We will need to update all your credit documents now, too. Paycheck stubs and bank statements need to be no more than 30 days old. Your loan package will be submitted to underwriting where your final loan approval will be issued. Loan papers will be ordered and delivered to your settlement agent. First time home buyers will meet with your team for closing and sign your paperwork which will then be returned to the lender for final funding. Once the signed paperwork has been reviewed, funds will be issued for your mortgage. You’re officially a homeowner.