First Time Home Buyer
 

FIND A LOAN OFFICER AND GET PRE-APPROVED
Before you look for that dream home, find a mortgage broker or loan officer and figure out how much house you can buy. That is called getting pre-approved. Your mortgage loan officer is there to guide you through the process of securing a mortgage so you can buy your home. Make sure that you find someone you feel comfortable with and can trust. This is one of the most important purchases you will make in your life.  You want someone who is on your side, is knowledgeable, and will work hard for you. Ask for referrals – your realtor, friends and family will be able to refer you to a qualified person who will have your best interests in mind.
 

When you sit down with your loan officer, you will need to know how much money you make per month, before taxes, how much money you have in the bank, and a general idea of how much you would like to invest in your home purchase.  Once you’ve given your Loan Officer all of your information, you will then discuss your loan options. The better your credit, the more options you have. Besides the down payment, there are also fees involved with securing a loan, these are called closing costs. Your loan officer will explain to you who will get paid and for what. They will also work up a Good Faith Estimate – that is just what it sounds like – an ESTIMATE of how your fees will be based on different loan scenarios. For example – an origination fee is how the Loan Officer gets paid, and is generally 1% of your loan amount. You would have the option to not pay a loan origination fee, but have a higher rate. This would lower the amount of money you would need to bring to closing, but your payment would be slightly higher.

It is your loan officer’s job to explain all of these options to you so that you can make an informed decision that you are happy with. It is your home after all – you will be the one making the payments.

Once you’ve selected a loan program, make sure your broker has the ability to run you through an automated system – what that means is you will have an actual conditional approval, and as long as we can document everything asked for you are approved.

Your payment is broken down into different sections – referred to as PITI – Principal, interest, taxes and insurance. Principal and interest is based on your loan amount and rate, your taxes are state regulated, they are based on your location’s tax rate and the value (not sales price) of the home. There are 2 kinds of insurance -  homeowner’s insurance which is mandatory and Mortgage Insurance. Mortgage insurance is mandatory if you do not have at least 20% equity in the property. This year, Mortgage Insurance is tax deductible.



FINDING YOUR HOME
Now that you have your pre-approval in hand, the fun part begins. You and your realtor will go around and look at houses until you find the one that is right for you. Your realtor will negotiate a price and write the contract for you. One thing to keep in mind is what is called “seller paid closing costs” or “seller contributions”. It sounds a bit deceiving, because the sellers do not actually pay for your closing costs, they raise the price of the home by up to 3% and then give that money back to you, this will reduce the amount of out of pocket expense at closing, because you would apply that money to a lot of the fees listed on your Good Faith Estimate. Once your contract is accepted by the seller, it is time to get to work on completing your loan.


THE LOAN PROCESS
Generally your realtor will send a copy of the contract to your Loan Officer. At that point, you will need to meet with your Loan Officer to give them all your documentation and sign disclosures. The documentation required will have been pre-determined on your pre approval, and is usually 2 pay stubs, 2 months bank statement and sometimes 2yrs W2’s.  The disclosures you will sign will go in your loan file to be sent to the lender – this tells the lender that your Loan Officer has followed all the rules. Be sure to ask questions if you do not understand something, it is their job to explain it to you.

This is also the time to talk rates… you will need to decide if you want to lock or “float”. Rates change daily, you should talk to your Loan Officer and lock when you are comfortable with a rate, then do not look back – just know that you got the best rate on the day you locked.

After the loan officer has collected everything, they will then pass your file to a Loan Processor. This is when appraisal, survey and titlework are ordered. The Loan Processor’s job is to make sure the file is put together for the underwriter with all of the documentation required on the pre-approval, that way the underwriter can check everything off and clear the file to close. This is the time that you may be asked to provide some documents that may have been missed such as all pages of a bank statement - that seems to be an underwriter favorite.

When your loan package goes to underwriting, is a good time to work on your homeowner’s insurance. If you have a mortgage, you will need homeowner’s insurance – this is an insurance policy that will pay your mortgage off in case you burn your house down.

The file will come out of underwriting approved one of two ways – conditionally approved, means you will need to provide something additional before being clear to close; or clear to close – and that means the lender is ready to draw your papers so you can close.


THE CLOSING PROCESS


Once your file is clear to close – the Loan Processor will set up the date the title company will receive your documents, based on when your closing date is. The goal is to have your documents to the title company a few days in advance; this way, the title company can work up your HUD or settlement statement – this is a final breakdown of fees, your new loan and how much money you will need for closing.

You will need to bring a cashier’s check to closing as well as your driver’s license and social security card. Your Loan Officer should stop by your closing to make sure all is well. Enjoy your new home!



WHAT SETS DEXTER MORTGAGE APART
At Dexter Mortgage we are committed to creating customers for life – and we go the extra mile to ensure that.. We will analyze your financial information before you look for that home to make sure you will not be in a house that will make you cash poor – we feel it’s our duty to do what is best for you, even if that means we have to tell you something you may not want to hear.

Our staff is all licensed Loan Officers.We really do understand that this can be a complicated and confusing process; our goal is to simplify it for you, and make it as stress-free as possible.