| Buying a home for the first time can be confusing. | | | | application for a mortgage. At this point, you will usually |
| There are so many things to consider and so many | | | | have to pay a mortgage application fee. If your |
| things that must be done the right way before you sign | | | | mortgage is approved, it generally locks in the |
| your name on the dotted line. Understanding the steps | | | | mortgage rate you are offered for 30 to 90 days. |
| of the mortgage and home buying process can make | | | | - Your lender will arrange for a home appraisal to |
| it much easier to navigate. Here's a brief guide to what | | | | determine that the house is worth the amount you are |
| first time home buyers need to know about the | | | | asking to borrow in order to purchase it. |
| mortgage process. | | | | - You or the lender will order a home inspection, which |
| Before you look for a home: | | | | is not the same as a home appraisal. A home |
| - Decide if you're financially ready to buy a home. | | | | inspection will point up any problems with the home |
| When you compare rents side by side with mortgage | | | | that may have been missed by a casual inspection. |
| payments, buying a home may seem like a great | | | | Insurance Policies that You Will Need |
| bargain, but it's important to consider all the costs that | | | | - Get home owners insurance and provide proof of |
| come along with owning a home. | | | | coverage to your lender. |
| - Learn about the different mortgages available and | | | | - Private mortgage insurance is a policy that will pay |
| figure out which is best for you. T | | | | off your mortgage if you should default on the loan |
| - Get your financial information together. In order to be | | | | under specific circumstances. Most lenders require that |
| approved for a mortgage, you'll need to document | | | | you carry PMI if you make a down payment of less |
| your income, your assets, your employment, your | | | | than 20%. Generally, the cost of PMI is added to the |
| residence and your existing debt. | | | | amount financed. |
| - Get pre-approved. A pre-approval letter will give you | | | | - Title insurance is a policy that guarantees a clear title |
| a firm idea of your prospective price range for a new | | | | to the house. When you purchase title insurance, the |
| home, and it will tell your real estate agent and home | | | | insurance company will do their own title search. If any |
| sellers that you are serious about buying a home and | | | | issues of ownership related to title arise after you |
| financially capable of managing it. Pre-approval is a | | | | have taken over the house, the insurance company will |
| more formal and in-depth process than pre-qualification. | | | | pay all legal and other costs related to the title issue. |
| A pre-approval letter is a formal certificate from a | | | | Closing on Your New Home |
| lender saying that you are qualified for a mortgage up | | | | - Your lender will let you know in advance how much |
| to a certain amount. While it is not an agreement to | | | | the closing cost will be. This is generally a "good faith |
| give you a mortgage, it is one step closer to having the | | | | estimate", and may vary slightly from the actual |
| cash in hand to buy a house. | | | | amount when all costs are totaled. |
| - Find a real estate agent. Your real estate agent will | | | | - You will be expected to bring valid identification and |
| work in your best interest and help guide you through | | | | certified funds or a cashier's check for the amount of |
| the rest of the process. | | | | the closing costs. |
| Once you find your house: | | | | - The closing costs will include any loan fees, |
| - Work with your agent to determine a fair offer price. | | | | prepayment of interest (points), copying fees and |
| A written offer will include the price you'll pay, any | | | | administrative fees charged by the lender. |
| conditions that must be met, amount of earnest | | | | - You will have a chance to read over all the |
| money, complete legal description of the house, down | | | | documents concerning your mortgage and your home. |
| payment and financing details. | | | | The closing attorney will give you concise explanations |
| Earnest money is included with your offer to show the | | | | of each document that you are asked to sign, but you |
| seller that you are serious. If your offer is accepted, | | | | have the right to read each one over yourself as well. |
| the earnest money becomes part of the down | | | | - Once all the papers are signed, you will endorse the |
| payment. If your offer is rejected, the earnest money | | | | check to the closing attorney, and receive the |
| is returned to you. If you pull out of the agreement for | | | | documents that make the home yours. The closing |
| reasons other than those stated in the offer, you'll | | | | attorney will see to the disbursement of funds - paying |
| forfeit the earnest money. | | | | off any remaining mortgage, payment to the current |
| - Once your offer is accepted, make a formal | | | | owners, and any other associated costs. |