Are you a first-time homebuyer ready to start the journey of purchasing a home? Owning your own home is a significant milestone. However, the process can seem daunting at first. There are so many questions that often are unanswered until you start the process. When do you contact a bank in the home-buying process? How long does it take to close on a home? We will walk you through so you can navigate the path to homeownership with more confidence!

What should you know before buying a home?

When deciding on buying a home, it is never too early to reach out to a lender. A lender can help walk you through the process, so you don’t get lost on finding your home. They will help you navigate what you can afford by looking at your current expenses, reviewing your budget and providing tips on how to improve your credit score so you can secure the best rate for your situation.

Assess Your Finances

As a first-time buyer, it’s great to see your whole financial picture. Whether you work with a lender or calculate your finances on your own, understanding your financial health impacts how much home you can afford. By closely examining your current expenses and reviewing your budget, you can accurately determine the money flowing in and out of your account each month, helping you identify a realistic monthly mortgage payment.

Our mobile app offers budgeting tools that categorize your spending and create a budget tailored to your income and spending habits. To access these features, open our online banking app and navigate to Financial Tools > Budget. This feature provides live tracking of your income and expenses, making budgeting easier and more efficient!

Downpayment

After evaluating your finances, you will be able to assess your savings. This will help determine how much you can afford, including everything from a down payment, closing cost to monthly mortgage payments. Keep in mind additional expenses such as property taxes and homeowner’s insurance.

There are many programs in place to help first-time home buyers get into a home. Your lender can walk you through programs and grants that you might qualify for to assist with closing costs or a down payment. After you understand your current income and expenses, it’s a good time to check in on your credit score.

Credit Score

A good credit score can help you secure better mortgage rates and terms. If you aren’t satisfied with your score, you can take steps to improve it, such as paying down debt. Your loan officer can help guide you through this process to ensure you have the best credit you can achieve within the time frame that you want to buy your first home.

Now that you have reviewed your finances and credit score goals, you should have a better idea of when you can buy your first home!

Getting Pre-Approved for a Mortgage

Having a pre-approval letter in hand can allow you to act quickly and confidently when you are ready to put down an offer. Contact your local lender to begin the pre-approval process. During this process, they will evaluate your financial situation and determine how much you can borrow. This information will help you narrow down your home search to properties within your budget.

A trusted lender can help you understand your financial options and get pre-approved for a mortgage. A pre-qualification letter is a letter that shows the maximum amount the bank will lend you. This amount is based upon initial qualification and is subject to final underwriting. It doesn’t mean you need to spend the whole amount but gives you an idea of what types of home you can look at before you start shopping. The lender will help you find the right loan for what you are looking for, whether that is Rural Development (RD), conventional, Veterans Affairs (VA) or construction finance loan.

Once you have the mortgage option that is right for you, a lender can get you pre-approved. When you are prepared to make an offer, you want to make sure you have pre-qualification papers in hand. That is why our lenders are available to pre-qualify you seven days a week!* Plus, our decisions are made locally, which allows us to get to know you and offer flexible financing to meet your needs.

Now, your real estate agent can start showing you housing within your price range. Some real estate agents only start showing you houses once you have a pre-qualification letter in hand. This helps your agent, and you stay within your budget.

The Help of a Real Estate Agent

A knowledgeable real estate agent can be your greatest ally as a first-time homebuyer. They can help you navigate the complexities of the market, negotiate offers and guide you through the closing process. Choose an agent who is experienced in working with first-time buyers and who can provide personalized guidance and support. This is the main part of the home-buying process many think of when they think of buying a home.

Researching the Housing Market

Familiarize yourself with the housing market in your desired area. Research recent sales prices, market trends and neighborhood amenities. Look for neighborhoods that align with your lifestyle and preferences such as school districts, commute times and access to amenities, like parks and shopping centers. It is good to know what you can afford before you start looking for homes in an area you can’t afford.

You probably have created a list of must-have features and preferences for your new home like the number of bedrooms, bathrooms and other features you desire. Keep your budget in mind and be prepared to compromise on certain features if necessary. Your agent can also provide insight into a realistic home for your budget and show you different preferences on your list.

Making an Offer

Once you find your next home, your pre-qualification will help you stand out amongst others who are trying to get into a home as well. Your lender and realtor will work together to help prepare an offer for you when you are ready. During this process of making an offer, you can start looking at getting a professional home inspection.

Conducting Home Inspections

Once you’ve found a home you love, it’s essential to have it inspected by a qualified professional. A home inspection can uncover any hidden issues with the property, such as structural defects or major repairs needed. Depending on the findings, you may be able to negotiate repairs or adjust your offer accordingly. You will place an offer on the home and the seller will either accept, negotiate or decline the offer. If your offer is accepted, congratulations you are closer to becoming a home buyer!

Appraisal

Once the negotiations are wrapped up, it’s time to get an appraiser to determine your home’s fair market value. They’ll look at things like square footage, the number of bedrooms and bathrooms and what similar homes have sold for recently. This will help you see if you paid a fair price. If the appraisal checks out and you’re ready to move forward, the next step is to give your loan advisor the homeowner’s insurance policy you’ll have in place when you close.

Find Homeowners Insurance

Your home is not only one of your largest investments, but the place where your life happens. It’s important to ensure that it is protected. There are many different types of coverage, which is why our team is here to walk you through the process to determine what insurance fits your needs. Get a free quote and learn about the coverage recommended for you and your lifestyle.**

Final Approval & Closing on a Home

This is the exciting part where you close on the home. This process involves a lot of paperwork, but your lender is here to support you in the process and answer any questions.

The appraisal and loan conditions go through underwriting for final approval. Once approved, you’ll receive your closing disclosure, summarizing your loan terms, closing costs, and pre-paid items, which your mortgage advisor will explain. This step also includes the closing cost, which is typically around 2% to 5% of the home’s purchased price for the buyer but can vary based on a variety of factors.

After a mandatory three-day waiting period, during which your employment may be verified, you’ll move to closing. Once everything is signed, you are ready to move in. If you aren’t loving the mortgage rates, don’t worry – you can always refinance down the road for a better rate! Marry the house and date the mortgage rate. Plus, we close loans within an average of 45 days to ensure you don’t miss out on your next home.

Reaching Out to Your Local Lender Today

Buying your first home is an exciting and rewarding experience. By following these steps and enlisting the help of professionals, you can navigate the process with confidence and peace of mind. Your dream home is within reach—let us help you make it a reality!

Are you ready to take the first step toward homeownership? Contact your local lender today to get started on your home-buying journey. They can provide personalized guidance and support to help you achieve your homeownership goals.

*Customer service hours do not include federal holidays observed by Midwest Heritage.

**Products offered by Midwest Heritage Insurance Services are not insured by FDIC or any other Federal Government Agency, are not a deposit or obligation of, or guaranteed by Midwest Heritage, may involve investment risks, including possible loss of principal amount invested, and may lose value.