First Time Home Buyer's Guide To Home Loans

So you’re thinking about buying your first house, townhouse, condo, ANYTHING to get away from living with family and roommates? As a first time home buyer the first part of the process should be your pre-approval for financing. Until you have a budget set, not just for payments that you want, but can also afford, you shouldn’t be looking at homes.Here’s a basic timeline of how the purchase process works: 

  • After you put in an application, I review to see which programs we can qualify you for. 
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  • To issue the  pre-approval for your first home, I need to verify your income documents 
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  • After approved, I ’ll send the letter to you and any realtor you choose to work with.
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  • After you have an accepted contract on your first home we’ll send you all the necessary documents to sign. Most of which can be e-signature. Other items that are generally needed     include:

    • Past 2 Years W2s and/or  1099s.
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    • Past 2 Years tax returns, all pages signed,  if self-employed or any income not included on W2s and/or 1099s on taxes.
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    • Social Security Awards   Letter and 2 months bank statements showing deposits
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    • Letter of explanation for all credit inquiries or credit issues (I can help you with this).
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    • Most recent 30 days worth of pay stubs prior to closing.
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    • Clear copy of driver ’s license or other government-issued identification.
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    • Asset statements verifying funds needed for down payment. Any deposits not from payroll over $500 will have to be explained to the underwriter. If utilizing funds from a source other than a bank account, terms of withdrawal will be required.
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    • Gift funds are allowed for down payments, but a letter from the gifter is required to be signed.      Whoever is gifting the funds may be required to provide asset statements evidencing where the funds came from. Again, deposits not from payroll will have to be explained to the underwriter.
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    • If utilizing 100%  financing via USDA, VA or HOME 100, asset statements may sometimes be required to evidence reserves.
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    • Name, address and phone number of someone who can verify employment (like HR Department).
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    • Home owner’s insurance contact information. 
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    • Copy of tax ticket and/or mortgage statement for all other properties owned.
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  • The above list of documents can be sent at the beginning, which is actually preferable so that you can close faster.
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  • We’ll submit the documents to underwriting.
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  • The appraisal will be ordered 
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  • The title report will be ordered
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  • Upon appraisal and title report receipt, if there are no other conditions to move the file to close, the file will be cleared to close.

Once cleared to close (CTC) a closing disclosure will be sent to you.After you acknowledge it, we can close 4 days later. The date of acknowledgment count as a business day. It is important that during this process you:

  1. DO NOT open new lines of credit 
  2. DO NOT quit your job.

It’s important not to open new credit lines or charge up existing credit accounts because it can affect your credit score and a soft credit report may be done before closing to ensure nothing with your credit has changed. If something changes with your employment, notify your loan officer immediately. 

I know this seems like a lot to take in, and it is. But if you do everything listed above, you likely won’t need much else. There are a ton of different loan programs available and I’m here to explain the pros and cons of each program you qualify for. Loans are not “one size fits all”. After your Realtor has your pre-approval, you can start looking at homes. Sometimes your budget won’t get you everything you want turnkey, but we do have 3 different renovation loans that might get you what you want within your budget.

 

One of the biggest complaints from home buyers (and their realtors) about their loan officers is lack of communication. If I speak to the buyer or the Realtor on the phone, I like to email both the buyer and Realtor once the conversation is complete so everyone’s on the same page. I like to give daily updates, even if there’s nothing to update. Whomever you choose to be your loan officer, I do recommend working with someone local and not in the call center for a large company. Sure there’s great software that people can put notes in when they speak to you, but you’ll get a different person each time you call. Call me old-fashioned, but I think there’s something to the buildinga relationship. While I can do loans in any state, I stay local so that I can be an expert in my market and meet people face to face.

 

Programs and options available to me include:

  • In-House underwriting
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  • Conventional
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  • FHA, including 203(k) renovation loans
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  • VA 100% financing for veterans
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  • USDA 100% financing for low/moderate income rural     buyers
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  • HOME 100: Conventional 100% financing for qualified     buyers
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  • Homestyle Renovations loans for primary, secondary and     investment properties
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  • In-house renovation loans
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  • Construction
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  • Land
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  • Bridge loans
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  • No minimum loan amount 
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  • Doublewides and even single-wides in certain cases. 
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  • Unique properties
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  • Unusual credit scenarios
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  • Commercial loans
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  • Whole subdivisions with spec homes.
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  • We’re also the largest agricultural lender in the state. 
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  • We also service all non-government loans.

There are some programs I don’t do, and if that’s the best program for you, I’ll refer you to someone that can do it. If you ever have any questions about anything I’ve discussed here, don’t hesitate to give me a call, email or text. I’ll give you honest advice regardless.

Randy Rodgers 

NMLS #906356

First Bank and Trust Company


This blog was written by Randy Rodgers, the views on this blog do not represent the views of Cllocktower Realty Group and it's affilitates.