Buying your first home should be exciting. It’s a time of celebration and accomplishment. This is a big thing to be proud of, and often comes with much hard work to get to the end result of owning your own home. City Creek Mortgage can help!
As you prepare to buy your first home, take a look at these steps and tips for the process. Once you understand how it works, contact us at City Creek Mortgage to get you in your new home.
Start Planning for Costs
Buying a home is not cheap. There will be costs for the closing process, as well as for any required down payment from your mortgage company. Some mortgages require a 20% down payment, while other programs might allow for a 3% down payment instead.
Before you begin house shopping, you should start planning ahead and preparing for these costs. It’s a good idea to start saving ahead of time, or at least working to figure out how you will cover these costs. In addition to any required down payment, you will also need to consider closing costs.
Closing costs do vary depending on the lender, the realtor, and the closing processors. These costs range from 2-5% of your total loan value. It is possible to come to an agreement with the seller to have them pay a portion of your closing costs, but this is not guaranteed.
You may not know exactly how much you will need for a down payment or closing costs. But if you make the effort to start setting money aside, you can actually use those reserves to help determine what type of price range you can afford.
Determine Purchase Budget
Next, you need to start planning a budget for purchase. This is where you figure out how much you can afford to spend. The budgeting process considers the reserves you have available for costs like we mentioned above. It also includes your income and your expenses to determine an ideal range.
If you’re good with numbers and budgeting, you can sit down and review the income and expenses you already have. Are you paying rent? You might be able to use what you pay for rent as an ideal starting place for the type of mortgage payment you can afford.
When you compare your income to your expenses, what type of debt to income level do you arrive at? A mortgage lender typically wants to keep you below 35% on the debt to income ratio. This is the total of your debt payments in comparison to your income. Some lenders will go higher and some actually draw the bar lower.
If numbers and doing the math confuse you or you just want a quick reference, try using a mortgage calculator or a pre-qualification tool. Either of these can be used to determine the type of mortgage payment you can afford and give you a budget range to start looking for a house.
Find the Home Fit
Once you know your shopping range, you can start looking for the right fit. Be patient with this process. It’s a long-term commitment, so don’t force yourself into the first home you find available if it’s not quite what you want.
There may be some details that you have to compromise on, so be open to certain variations. However, you also should look for homes that fit your needs the best. Try to create a list of qualities that you really want to find in a home. Prioritize those qualities and determine what you are willing to be the most flexible with in the process.
Provide these details to your realtor so they can help locate the best fit and keep an eye out for new options as they become available.
When you are ready to officially start shopping for a home, we recommend getting a pre-approval. The pre-approval process will take a brief overview of your income and expenses and look at your credit. Since it’s temporary, you should only use the pre-approval when you’re serious about finding a home.
Having a lender pre-approval in hand might give you an advantage when you find a home you’re interested in making an offer on. This tells the sellers that you’ve already done the legwork to get approved when you find a home. It lets them know you’re prepared to follow through.
The housing market is on fire right now. Houses are selling really quickly, so getting the pre-approval might just help you make the win when a great house becomes available.
Offer & Mortgage Process at City Creek Mortgage
When you find the home that you want, it’s time to make an offer. This will be completed with your realtor, and they will coordinate with the sellers and their realtor.
The offer will be a written contract where you suggest to the seller how much you will offer and any terms that you would like to request, such as them paying closing costs, home inspections, or anything along those lines. This is then sent to the seller, and they will either accept, deny, or make a counter-offer.
When an offer is accepted, this is when your mortgage process begins. You have a pending contract in place, so get with your mortgage company, provide them that contract, and then be diligent about providing any necessary paperwork along the way.
Make the Home Yours with City Creek Mortgage
After all of the processing and waiting, you will finally get to the closing date. This is when you will sign papers and receive the keys to take ownership of your new home. It’s such an exciting day!
City Creek Mortgage is here for you as you work through the buying process. From tools like calculators and reviews to mortgage applications, we’ve got you covered. Let’s get you into that first home.