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Buying a home is often the biggest and most complicated financial transaction a consumer will ever encounter. This can be intimidating, especially for the first time home buyer. Even experienced home buyers are looking for guidance in this changing mortgage market. Rules and guidelines seem to be constantly changing–leaving you wondering where to turn for guidance.
That’s why I have pulled together this free home buying reference guide. In this home buying guide we will focus on the first time home buyer, but even the most experienced home buyer will find important tips to financing that new home loan.
Personal Finances and Credit
Before considering shopping for that dream home or even investigating mortgage rates make sure your personal finance and credit is in order. This means collecting and reviewing the same documents that your mortgage lender will consider in qualifying you for a mortgage loan.
Brief home loan documents checklist:
- Income: Pay stubs, W-2, income tax returns
- Assets: Bank (i.e., checking and savings), investment, 401K/retirement statements
- Credit: Credit reports and FICO scores from Equifax, Experian, Transunion
Additional personal finance and credit home buying resources:
Buying Your First Home
If you’ve never bought a home before the process can seem a bit overwhelming. There is the process of deciding to be a homeowner at all and then you have to navigate the mortgage and real estate processes. I’ll guide you with some of the basic decisions and things you need to consider before you even start running the mortgage and real estate gauntlet.
Your First Mortgage Home Loan
Getting a your first mortgage can be exciting and a little bit scary. It is likely to become the biggest financial commitment of your future, yet at the same time probably the largest source of future wealth. Learning how to smartly finance your first mortgage will give you the pleasure of owning your own home and the peace of mind of a great financial investment.
Down Payments and Mortgage Insurance
In the current mortgage market you need to consider the amount of down payment you can put on your home purchase. There are several options from as little as 3.5% for a FHA loan to as much as 20% for a conventional loan. Anything less than 20% is going to bring the need for private mortgage insurance (PMI). Make sure you are financially prepared and aware of these additional expenses of homeownership.
Closing Your Mortgage Loan
Assuming you have picked out the perfect home and navigated the home loan process, you are ready to close. Do you have everything in order for a smooth closing? Consider this brief closing checklist:
- Pre-approved or pre-qualified mortgage
- Title search
- Reserve funds for closing
- Home inspection
- Home insurance
- Date of occupancy
- Settlement statement
- End of month closings
