Tuesday, June 16, 2015


Step 3

Secure Financing

Many first time home buyers find the financing step to be confusing, complex, and a little intimidating. In fact, it's the main reason people back out of home ownership, but it doesn't have to be scary! Here is a simple six-step plan to financing that anyone can follow.

1. Choose a loan officer or mortgage specialist. You may be thinking that is easier said than done, how do you simply choose a loan officer? Don't worry. Simply ask your real estate agent, they will have at least a couple of mortgage specialists they know well. If you don't have an agent you can consult your financial institution as well. Ask the loan officer about programs for first time home buyers, they should be able to explain all your options, including the different types of loans available to you. 

2. Get pre-approved. This is simply a matter of giving your loan officer any information and documents they ask for and filling out some paperwork. The loan officer will determine the amount of the loan you can get based on your income, debts, and assets. 

3. Determine what you want to pay and select a loan option. You don't need to spend the max amount of money you have been approved for. Consult the loan officer about what your monthly payments will be and decide a price range that's right for you. This is also when you'll decide which type of loan you'll be going with, such as FHA, Conventional, VA, etc (your loan officer will explain each of them to you in detail).

4. Submit to the lender an accepted purchase contract. To put it a simpler way, find a house you would like to purchase, your agent will write up a contract between you and the seller, and that contract will be sent to the lender. 

5. Get an appraisal and title commitment. Now that your lender knows what the agreed upon purchase price is, they will apply for you to get a loan in that amount. To do this they will make sure the title of the home is clear of liens (no debts attached to it) and they will send an appraiser to the home to make sure it's worth the amount you've agreed to pay for it. 

6. Obtain funding at closing. At the end of the home buying process your loan funds will be released to the sellers as payment for the home purchase. 

That is your entire financing process from beginning to end. If it still seems sort of complex just keep in mind most of these steps will be handled by your real estate agent and your loan officer. While going through the steps you won't be expected to do anything without an explanation of exactly what is needed from you. Remember, first time home buyers purchase new homes everyday, if they can do it so can you!

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