Call (303) 222-0027 or e-mail firstname.lastname@example.org for more info and a free list of first time home buyers programs, including some that only require $1,000 down.
For some first time home buyers, the process of getting a loan can be challenging – not because they don’t make enough money or have a good credit score, but just because everything is new to them.
We’ll not only help you find your first home, but we can also put you in touch with mortgage companies and lenders who have experience working with first time home buyers and can guide you through the process.
In general, here’s what the loan process for first time home buyers involves:
Start Working With A Real Estate Agent To Find Out How Much It Will Cost To Get The Home You Want
A good place to start, when you’re considering buying your first home, is to work with a real estate agent. We have experience working with first time home buyers and would love to help you! We’ll start by finding out what type of property you prefer (condo, loft, townhome, or house), where you want to live, how many bedrooms and bathrooms you want, and more. Once we know your criteria, we can give you a rough price range of what your first time home will cost and an estimate of what your monthly mortgage payment will be.
Start Working With A Mortgage Company To Find Out How Much You Can Borrow
As soon as you start working with us, you can also start working with a mortgage company to find out how much you can borrow. This varies a bit, but a good rule of thumb is that most mortgage companies and lenders will allow your mortgage payment and other debts (credit cards, student loans, car loans, etc.) to be up to 45% of your gross monthly income. So, as an example, if you make $42,000 per year, which is $3,500 per month, you’ll be able to qualify for up to $1,435 of monthly debt. If you’re already paying $300 per month toward your other debt, you’ll be able to have your mortgage payment go as high as $1,135.
If you have a mortgage broker or lender in mind, great! If not, we’d be happy to give you several referrals, of people we trust, who do an excellent job with first time home buyers.
Get A Good Faith Estimate
Once you’ve chosen a mortgage company or lender, you need to get a good faith estimate, which will show you your expected interest rate and closing costs. Good faith estimates can vary widely from broker to broker, so you might want to get more than one good faith estimate.
Before you start house-hunting in earnest, it’s a good idea to have a “pre-qualification” letter from a mortgage company or letter. This letter simply states that you’ve been pre-qualified to borrow up to a certain amount, say $200,000, as an example.
Having this letter in hand – before you fall in love with a property – can be helpful. Once you find the condo or house you want, it’s usually a good idea to submit an offer as soon as possible. And it’s a nice touch to be able to give the seller the pre-qualification letter, which shows that you have the financial strength to make the purchase.
Gather All Of Your Financial Documents
To qualify for a home loan, you’ll need to submit financial document, including:
Apply For A Loan
Once you have all of your financial information gathered, you can apply for a home loan.
When you apply for a loan, most mortgage companies will collect the fees for a credit report ($35-$75) and a property appraisal ($350-$600).
The mortgage company will analyze all of your financial information and combine it with your credit score (which, in general, should be 620 or higher to qualify for a first time home loan) to make a decision as to whether to approve your home loan.
You can either apply for a home loan as you’re looking for your property (the approval and a locked interest rate are usually good for up to 60 days), or as soon as you put in an offer on a home.
Put In An Offer On A Home – Get A Contract Accepted
Once you find a home you like, we’ll draw up a contract and submit it to the seller. If the offer isn’t accepted, we’ll keep looking. But if the offer is accepted, the contract will be forwarded to your mortgage company or lender.
Have The Property Appraised
All mortgage companies and home lenders require a property appraisal, and they’ll order the appraisal. As part of your closing costs, you’ll pay for this appraisal, which typically costs $350-$600.
The reason for he appraisal is that the lender wants to make sure that the property is really worth the amount you’ve offered the seller – a protection that’s necessary for them and you. As tempting as it can be to go crazy with an offer, when Denver’s market is so crazy, it’s never a good idea to pay $225,000 for something that’s worth $210,000, as an example. The appraisal ensures that this doesn’t happen. In many cases, if the appraisal comes in for less than what you offered to pay the seller, the seller will adjust the price accordingly.
Get Loan Approval
Once all of your financial information has been turned in and the appraisal, title information, and HOA documents (for condos, lofts, and townhomes) have been collected, your “package” will be submitted to a loan officer for approval.
Don’t Make Any Purchases That Could Affect Your Credit Score
While you’re waiting for your closing – the appointment during which you’ll sign the loan documents and get the keys to your new home – it’s important that you not jeopardize your credit score. Don’t open or close any accounts. Don’t make any large purchases. Just sit tight until you’ve made it through the closing.
Go To The Closing
At the closing, you’ll the amount you owe for the down payment and closing costs, and you and the seller will sign documents. Lots of documents. You can request that your mortgage company or lender e-mail you these documents in advance of the closing, so that you don’t have to read everything at that appointment.
Own Your First Home
And that’s it! With your signatures on all of the documents at the closing, you become a new homeowner, and the loan process is over.
For additional information on the loan approval process for first time home buyers, or to start looking for a home, please call (303) 222-0027, or e-mail email@example.com.
Please note: If you decide to work with us, we’ll be your real estate buyer’s agent. As such, you won’t pay our commission – the seller will!