- Real Estate
First Time Buyer Home Loans
First Time Buyer Home Loans
For the First Time Home Buyer applying for a home loan can be a little nerve racking and a little mystifying. To help soothe your nerves then arm yourself with knowledge of the processes before you get in the thick of it and you will breeze through with flying colors.
Checking with a Mortgage Lender should be done first before you look for a home. Most real estate agents will require you to do that before they will take their time showing you homes.
If you take into consideration that agents only get paid when the loan closes and that they may spend a lot of time and gasoline showing people homes, then when that prospect cannot qualify for a mortgage loan on the house that they select, you can better understand why the process is what it is.
When you first contact a Home Loan Lender they will usually ask you some general questions about your income, length of employment, rent history and your credit history. If that all generally sounds good, then they will proceed to take your application and retrieve your credit report.
Most of this can be done over the phone and only takes about 10 minutes.
The Mortgage Lender usually charges a fee for the credit report. This can be anywhere from $10 to $50, depending on your location and the lender. Most lenders will also ask you to sign a form giving them permission to pull your credit report.
Home Mortgage First Time Buyer
Once your credit report is retrieved it is reviewed for an adequate credit score and any other red flags that might be a problem is getting your mortgage request approved.
As of this writing most lenders are requiring a middle credit score of 620 before they will even consider the loan.
Other red flags might be unpaid tax leins or judgements, deliquent student loans or recent collection items.
First Time Home Buyer Mortgages
Let's assume that you have passed the tests up to now, then the mortgage loan officer will meet with you and ask you to sign the application and some disclosure forms.
If you went into the home loan companys office then you may have already completed this step.
Also, at this point you will be asked to submit copies of things like W2s, proof of rent payments, bank statements, pay stubs, etc. Depending on the type of loan you are applying for, you may have to provide several months or several years of these different forms.
Once all the requested paper work is received by you, the loan officer and processor have additional forms that they have to complete on your behalf. For instance, if you are getting an FHA home loan then they will have to request an FHA Case Number. There are usually a number of additional forms that they have to complete before the application package can be submitted to the mortgage lender underwriter for final approval.
In addition, various documents have to be ordered for you. These are items like appraisal, title, wood infestation report and a survey. These are all provided by an outside company. Normally an appraiser will take 4 to 5 days to get the appraisal report back to the mortgage lender after it is requested.
Lenders need to know that the house is worth what you are paying for it, thus the need for the appraisal.
Likewise, the Title company can take one to five days to return the completed Title search. The lender, as well as you the buyer, need to know that there are no leins against the property that you are buying.
Most mortgage lenders no longer require a survey, however you as the buyer may decide that you would like to get a survey so you can be certain of where the property lines fall.
Submitting to Underwriting
Once all of your documents have been assembled then your application package will be submitted to the mortgage lender underwriter.
As the First Time Home Buyer be prepared for the underwriter to respond by asking for some additional documentation. Don't be alarmed by this just simply provide the documentation as quickly as possible.
When the underwriter approves your home loan they issue a status that is termed "clear to close". At this point, if you the buyer has not already been asked to get the homeowner's insurance on your new home then you will need to do that. Your insurance company will supply an insurance binder to the mortgage company showing them as the mortgagee.
Once the "clear to close" is received, the actual closing documents that you and the seller will be required to sign at the closing will be prepared. This process usually takes 48 hours, so the closing can be scheduled with the attorney or closing agent's office.
The closing agent will complete the final "settlement statement" which will show all of the seller and buyer closing costs. At this point, you the buyer will know the exact amount of money that you will need to pay at the closing table.
Once you attend the closing, all the documents are signed and all funds disbursed, the buyer will be given the keys to their new home and they can move in.
The whole home loan process usually takes 3 to 4 weeks to complete from the time you actually have a signed contract on a home. For instance, you may go to a mortgage loan company and get pre-qualified for a home loan but then it may take you several weeks of looking at homes before you find one you like and have gotten an acceptable signed contract between you and the seller.
For the latest information on all aspects of homeownership and anything related to getting a First Time Home Buyer Mortgage please visit our blog First Time Buyer Home Loans.