What You Need to Know About the Home Buying Process
Are you looking for a new home, but don’t know where to begin? Dort Financial Credit Union has you covered throughout the sometimes overwhelming process, from learning the basics about home loans to moving into your home.
Before you even begin looking for a home, you will likely need to find financing for your purchase. Dort Financial can help you afford the home of your dreams with a home loan. A home loan, or a mortgage, enables you to purchase a home without having to foot all the cash out of your pocket when purchasing. You will, however, need to make a down payment, which is typically between 3.5-20% of the home’s appraised value, along with closing costs and some other fees. The lender then finances the rest of the purchase. You’ll repay the loan, along with interest, over the course of (generally) 15 to 30 years.
There are several types of home loans, and they are unique to you and your finances. The most common is a conventional loan, with a 5-20% down payment on the home. Another option is an FHA loan, which only requires a down payment of 3.5%, but requires mortgage insurance. There are also loan programs for special circumstances like first-time home buyers and military veterans, which offer special rates or down payment exceptions.
Now that you have a better understanding about home loans, make an educated choice when it comes to finding the perfect lender for you! Dort Financial can help you every step of the way. Our team members and Mortgage Department are ready to assist you wherever you are in the home buying process. Please call us at 800-521-3796, visit any of our 10 convenient locations, or learn more on our website.
10 Steps to Owning A Home
Step 1: Prepare your finances
*Set a realistic budget for your monthly mortgage payment.
*Boost your credit score before applying for a mortgage by making full and on-time payments, not opening too many new credit cards and keeping your credit utilization low. Call us at 800-521-3796 today, and speak with a representative to get off to a great start!
*Save for a down payment.
Once you have your finances worked out, you can start shopping for a mortgage.
Step 2: Get preapproved for a home loan
Once you’ve chosen your mortgage lender, you can apply for a preapproval on your loan.
The lender will ask for your financial history and other personal information. If all is satisfactory, the lender will begin putting together the details of your loan.
When they have determined how large a loan you are eligible for, they will grant you a preapproval letter. Make sure all of your financial paperwork is in order and hold onto all important financial documents in the months leading up to your application.
To make it easier, we’ve created a list of the information and documents you’ll need:
- Information about your current employer
- Salary including overtime, bonuses or commissions
- Two years’ worth of W-2s
- Statements for all checking and savings accounts
- Investments (stocks, bonds, retirement accounts)
- Proof of any gifted funds from relatives
- Car loan information
You will also need to explain any blemishes on your financial record; including bankruptcies, collections, foreclosures and delinquencies.
Step 3: Find a real estate agent
A real estate agent can help you find the perfect home that fits your budget and preferences. They have access to a broad range of homes on the market and can negotiate on your behalf.
Step 4: Find your dream home
Once you have a pre-approval and a real estate agent, it’s time to start shopping for homes. Be sure to know what you want, be prepared to negotiate and to beware of potential red flags as you search.
Step 5: Make an offer
If your offer is accepted, the deal will officially be “under contract”. At this point, you’ll likely need to pay “earnest money” or a portion of the down payment.
Home sales are typically under contract for 4-8 weeks, though this can vary.
Step 6: Get your mortgage
As soon as your offer has been accepted, your mortgage lender will get to work on the final details of your loan.
Step 7: Schedule a home inspection
A professional home inspection will reveal any potential issues that you may not have noticed.
Step 8: Obtain homeowner’s insurance
Shop around for the best rates and coverage to make sure you have a policy in place before the closing.
Step 9: Schedule an appraisal
The home appraisal, which determines the actual value of the home, assures the lender the loan details fit within their policies and regulations.
Step 10: Close and move in
Congrats – you’ve made it to the closing! Set aside several hours for the closing and come prepared with the funds you need to cover the remaining closing costs.
