Mary is a first time homebuyer who had to jump through more hoops than a circus clown to buy her first house.
The American Dream
Buying a home is the "American Dream" but can be extremely stressful and very time-consuming, even more so now when you're buying a home in 2022. If you want to buy a house, you better be prepared to put in a lot of work and learn to be very patient. That patience is going to be put to use once you get closer to your closing date. I also can't stress enough the importance of pushing through whatever circumstance arises. If you're denied a home loan the first time you apply don't give up, a lot of people get denied their first try. Your lender should be able to walk you through why your loan was denied and hopefully give you some advice.
It has taken me 5 years, 3 denied home loan, and almost completely paying off my debt to be able to actually buy my first home. I'm not saying it will be as hard for everyone as it was for me, just be prepared because it very well could. The house market has hit an all-time high in 2021 and they are selling incredibly fast. I'm assuming that has to do with covid and the fact that more people are staying home. More people staying home means that more people will be looking to buy a home, it makes sense. But that also means it can be a little harder today than it used to be.
I really do feel had I known what I know now the whole process would have run smoother for me. Not saying there wouldn't have been any issues, but it could have been a lot less stressful and tedious. In this hub I will be going over a few tips that will hopefully help you along your home buying journey.
Where to Start
1. Figure out what kind of home you're looking for. Do you want a pool, three bedrooms, a garage, whatever it is that you are looking for be precise about the specifications. This will make things so much easier for you and your real estate agent.
2. Find the right real estate agent, I recommend reading reviews and doing research. I recommend finding an agent that specializes in the type of loan you are planning on using. Some agents won't even work with you until you receive a pre-approval so that would help you with your next step.
3. Figure out what type of loan you are wanting and apply for a pre-approval. They'll usually want your income, social security number, place of employment, and rental history for the place you're living in currently. They should be able to tell you whether you've been approved or not within 24 to 48 hours. This could take longer depending on Holidays, weekends, etc...
4. Once you have your approval you can start looking and making offers on homes. Please don't try this on your own unless you know what you're doing. Realtors are excellent negotiators and might even be able to get the sellers and their realtor to accept a lower offer. Give the agent all the details on what kind of home you want all the way down to the color if possible. Because this will help them help you, the more details they know the faster they can find a home you love.
5. Once you have found a home you and your realtor will come up with an offer for the home. You'll be required to sign a few documents during this process but nowhere near what you'll be signing later. Just be on the lookout for those documents so the offer can be made. I also want to note that you may have a few offers that get denied before you get a yes. So don't get discouraged if that house you fell in love with goes to someone who made a better offer. You'll find a home and with a great agent it won't' take very long at all.
6. Once you get an accepted offer the real waiting and headache can being, lol. No joke though this is when you have to be ready.
1. Once your offer is accepted you, your, realtor and your loan officer can start working together. You'll get an estimate closing date and how much your loan is going to be for. That's including your down payment, closing cost, earnest cash amount, inspection cost, appraisal cost, pest control cost. You'll receive documents that sign which will go over these so make sure to read everything, this is a binding agreement.
2. Once you've signed the home buying agreement your loan offers will usually request more information. Including some of the same papers you've already sent in but don't argue with them this is their job. Sending them in again is so much easier than complaining, besides when you do this, you're only slowing down the process.
3. Once you've given them all the information that is needed then they can send your file to an underwriter. The underwriting will go through your file with a fine-tooth comb. They with either accept your loan right away, deny it, or give you an approval with conditions. Most of the time they'll give you the approval with conditions. This is when the crazy amount of filing, uploading and searching for documents started for me.
4. Don't be surprised if you get weird requests like a document that shows how much you pay for daycare for your child, even if you don't send your child to daycare. Or an explanation on why you had a late bill three years ago that showed up on your credit report. This is what caused me the most stress at first because some of the stuff they ask doesn't make sense at first. But usually, the fix could be easy as sending a note saying you don't send your child to daycare, and details on how you've paid off your debt and how you plan on keeping that from happening in the future. It's annoying but it's necessary, you're borrowing money from them and it's their job to make sure you're not too big a risk.
5. Once you've given the information that has been requested, they can submit your file for final approval. During this time, they'll look over your fie again and look at your credit again to make sure nothing has changed.
6. If everything went well this is when you will get the Clear to Close. As long as everything went well with your home's appraisal, and inspections then you're almost there.
7. Sign your closing disclosure as soon as possible so everything will go smoothly, after this there is a three-day waiting period and then you can start signing and notarizing your documents and move into your home.
Different Types of Mortgage Loans
|Type||Best for||Possible Rates for Tennessee(can vary by state to state, and depending on loan company)|
15 year fixed rate
This is usually best for people who are wanting to build equity and pay off their home faster
With a 20% down payment and great credit (700, or higher) you may be able to get rates as low as 2.291%
30 year fixed rate
This is for people who are looking to make a lower monthly payment and because it's a fixed rate the payments are predictable.
With a 20% down payment and great credit (700, or higher) you may be able to get rates as low as 3.205%
30 year fixed USDA
This is for people looking to buy areas in rural areas for little to no down payment.
With a 20% down payment and great credit (700, or higher) you may be able to get rates as low as 2.913%
30 year fixed VA
This loan is best for people military qualified buyers
With a 20% down payment and great credit (700, or higher) you may be able to get rates as low as 2.893%
30 year fixed FHA
This is best suited for people with lower credit scores
With a 20% down payment and great credit (700, or higher) you may be able to get rates as low as 2.91%
1. Keep a file of every document you send; you may be asked to send them again. Some of the documentation you may be asked to provide is listed below
- Birth Certificates for everyone in the house
- Social Security Cards
- Bank statements, I had to go as far back as 2019
- 2-years' worth of rental history if you have it
- Verification for every source of income that is being used. If it's child support, state subsidy, other forms like it you have to have proof that the income will be for at least 3 years, maybe even longer.
- A lot of lenders require at least 2 years' worth of employment history. Or verifiable income that will last longer than 3 years. There's a possibility of getting a loan with less than two years of employment but you need to have at least 6 months on your new job and be able to compare your last job to have at least 2 years of continuous work experience.
2. Make sure to respond to emails and phone calls asap, to move things along quickly.
3. Don't purchase any big-ticket items or take out any loans during this time it could cost you your loan.
4. Don't stress out too much, I wish I would have taken this advice myself.
Good Luck on your home buying journey.
This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.