June marks National Homeowners Month

Buying a home for the first time can be a stressful process because it involves a large financial decision without prior experience.

“The loan process is very confusing to many first-time home buyers because they have never experienced a situation quite like it,” said Chris Sander, MAMB president, in a June 3 news release. “Knowing what to expect can go a long way in making the consumer more comfortable during the process.”

MAMB recommends the following steps:

1. Find a lender and a real estate agent. The first step in buying a home is finding a reputable lender and a real estate professional for guidance through the home-buying process.

2. Apply for a loan. After choosing a reputable lender, the next step is applying for a home loan. This is where the potential buyer will sit down with the lender and discuss the different loan options that are available and figure out which option best suits individual financial needs.

The lender uses this meeting to figure out what the consumer is expecting in terms of loan value and gathers information for a credit report check.

When applying for a home loan, the lender will require the potential borrower to bring the following items: last year’s W-2 forms, most recent pay stubs (within 30 days) and most recent bank statement to verify assets and closing costs. Self-employed individuals will need to provide copies of tax returns.

3. Get a pre-approval letter from the lender. This is a letter to give to the real estate agent, selling agent or owner based on the situation.

This letter lets the seller know that the potential buyer is a serious bidder and already is approved by a lender for the required purchase price.

4. Find a home and write a sales contract. Work closely with a real estate agent to go over the ground rules and sales price of the house that is to be purchased. For first-time home buyers, the MAMB said it is always a good idea to ask the seller to pay all or partial closing costs.

5. Lock or float the interest rate. After a sales contract is in place, the potential buyer should discuss locking or floating the interest rate with the lender based on the length of time until closing.

6. Underwrite file. This is the stage when the lender and real estate agent will work together with other professionals in assimilating all financial statements, appraisal, contract, disclosures, etc., to make sure that the borrower is financially able to meet the loan requirements.

7. Signing and closing. This is where all of the hard work pays off. The buyers and buyers’ representatives meet with the sellers and their representatives to settle all the closing costs and transfer the title from seller to buyer.

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