7-step guide to a smooth mortgage process for first time home buyers

How to prepare yourself and your finances for a home loan

Buying a home is one of the biggest decisions you’ll make in your life. Between finding a loan officer, setting a budget, and house hunting…it’s a lot to keep in order. Follow our 7 steps below to get started on the right foot and bring your dream home to reality!

  1. Review your finances
  2. Submit an application
  3. Discuss loan options
  4. Introduce your team
  5. Find your home
  6. Submit an offer
  7. Prepare to close

Review your finances

First, you’ll want to prepare yourself for the home buying process, mentally and financially. Lenders will need what seems like countless documents to assess your income, employment history and debt-to-income ratio. It’s a good idea for you to review those documents before applying for a loan to make sure you can sustain monthly mortgage payments. You’ll also need funds available for upfront fees, like appraisal deposits and inspections.

Submit an application

Start researching mortgage lenders in your area to compare interest rates, loan programs and their lending expertise. Once you’ve selected a lender, you’ll submit a loan application, which requires your credit history, bank statements, and other financials so the lender can determine the appropriate amount to finance for your situation. Common documents requested are:

  • Income: Most recent 2 years of federal tax returns and W-2 statements, as well as most recent month of paystubs
  • Assets: Bank or investment statement for down payment and closing costs, full account statement covering most recent 60 days and paper history of transferred money or large deposits

Discuss loan options

It’s time to discuss loan options with your lender. Conventional loans are most common, but there are also government-insured loans with more flexible qualifying standards, like FHA and USDA loans. If you’re an active servicemember or veteran, a VA loan could be the right option for you. Each loan type comes with its own benefits and drawbacks, like down payment and credit score requirements, repayment timelines, mortgage insurance and more.

  • Questions to ask yourself: What is most important to you; a low down payment or low monthly payments? What area are you moving to? How long do you plan to stay in the home? Do you plan to start a family?

Introduce your team

Once your loan application is approved, it’s a good idea to connect your realtor with your designated loan officer. They often work closely to create a smoother, hands-off process for you.

Find your home

With your budget in mind, it’s time for the fun part! Your realtor may take the lead here, utilizing their company’s software to find homes for sale that fit your criteria. You’ll also continue collecting income and asset documentation to show at closing.

Submit an offer

If you’re ready to submit an offer, you’ve found a home you love - this is great news! You’ll discuss with your realtor how much you’re prepared to offer, and if you’d like to add additional items to make it more appealing, like foregoing inspections, providing earnest money, or paying for the seller’s closing costs.

At this point, a bidding war is possible. Bidding wars occur if multiple interested buyers submit similar offers and the seller asks all parties to try to outbid the others. As the buyer, your challenge is to win over both the listing agent, who is the trusted advisor to the seller, and the seller themselves. A few suggestions from our lending team:

  • Create a spoken strategic plan with your realtor and loan officer before submitting an offer.
  • Set a firm budget that you will not offer over, regardless of any emotional attachment to the home. Don’t be afraid to walk away if you can’t match others’ offers. There will be more buying opportunities, and it’s a safer bet for your financial stability to stay on budget!
  • Ask your lender or realtor to be available to accept the listing agent’s call, at all times. Keep your expectations high – you deserve it.
  • Allow your realtor to communicate directly with the seller or listing agent on your behalf. This is their area of expertise.
  • Work with your loan officer to be prepared for closing if your offer is accepted. They will help you lock in an interest rate and ensure an on-time closing.

Prepare to close

If your offer is accepted, you’ll move into the closing phase. Your lender will send you a Closing Disclosure detailing the specifics of your loan and what you’re required to pay at closing. Your loan officer will coordinate with you and their team to select a preferred date and time to close in person or virtually. After signing all documents at the closing meeting, you’re a homeowner!

Let’s face it; the house hunting process can be frustrating, so it’s important to have a good support system behind you. Our loan officers are talented, knowledgeable and trusted in our community. In fact, 97% of customers tell us they enjoy working with our team. Apply for your mortgage today!

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