Yes, you will need to arrange your own financing. If you are a member of a credit union, you can often get the best rates that way, but sometimes states and counties have incentives available that some smaller lenders may not be aware of. My county, as an example, had a down payment assistance program that would give you the money for a 3.5% FHA loan down payment. These programs are state and county specific, so I can't speak to what limitations there are. Usually, you need to be under a certain income level (determined by your Adjusted Gross Income on your tax returns), and buy a house within a certain area and/or under a certain price point. The actual numbers will vary based on your area. Use google to find these deals. Search "home buyer incentives" and your city.
To my knowledge, there are no federal credits available for first-time home buyers. Those expired back in 2010. For state and local credits and incentives, you will need to discuss this with your Realtor and lender.
As a first time home buyer, you should ABSOLUTELY find yourself a realtor to assist you with the process. Their commission is paid by the seller anyway.
The first step is going to be getting a pre-approval on a mortgage from a lender. You can either shop around yourself for this, or work with a mortgage broker who will help you run the numbers to see what kind of loan is going to work for you based on your household income and whatever else. Their services are all available out there and don't cost you anything extra aside from normal financing fees which you will pay even if you shop around yourself.
Buying a house is a step by step process, this is the first step you should take in order to purchase a house. The rest of the steps will fall in place, no matter the type of property you are purchasing.
In order to find out the type of loan programs you are qualified for you will have to fill out a loan application, with a mortgage broker, you can find one in your local telephone book.
Make sure this mortgage broker or mortgage banker is able to do government loans such as USDA, FHA and VA loans if you qualify for one. With a VA mortgage loan you are not required to have a down payment, this will save you on closing cost.
He will fill out this application, which takes awhile so grab your favorite beverage and sit down. Once you have completed the application, he will run your credit report which will have your credit scores. These credit scores will determine your interest rate.
The amount of your monthly debt payments you are required to pay as per your credit report and the amount of your monthly income earned would be used in a formula to determine what is called a debt ratio. This debt ratio would determine the amount a mortgage lender would allow you to borrow to purchase a house. This debt ration should normally not exceed 39%.
When you speak with the mortgage broker you will need the following documents to complete the loan application, there will be others, but this will get you started.
#1 One month of pay stubs for each person that will be on the mortgage.
#2 Six months bank statements from each bank in which you bank as well as statements from any 401K from you place of employment.
#3 Two years of federal income tax along with the W-2 that match.
Once he has all that he need to do he can then issue you a pre-approval letter so you can purchase a home. In this pre-approval letter will be the amount of house you are qualified to purchased.
Make sure, before you get your pre-approval letter, you and your mortgage broker go over all your options, as to all the mortgage programs you qualify for, the interest rate, monthly payments. This will allow you to make an intelligent decision.
Once you have your pre-approval you may now find a real estate agent to find yourself a home or he might have a referral.
If you are getting a FHA, fixed rate, two loans to eliminate PMI like an 80/20 or one loan, if you are qualified for and approved for a 100% loan.
You should select the loan that best suit your financial situation at the time. That could be an adjustable rate loan. It could be a fixed rate loan for 5 or 10 years and then adjust. Some adjustable rate mortgages only adjust once.
What might be good for one person might not be good for you, in other words just because your friends and all your real estate buddies are telling you about the great fixed rate they got, your financial situation might call for something else.
So select the best option for you and your financial situation.
You should also get a Good Faith Estimate (GFE) which will indicate the cost you will have to pay for getting this loan. It will also indicate the amount of your down payment.
Once you have found a home the real estate agent will then prepare a contract for you and the seller to sign. Your mortgage broker will now order an appraisal to show proof of the property value.
The mortgage broker might ask for additional information or documentation, don't get all up tight this is normal, just supply the information or find the documents needed.
After the appraisal has been completed you will be called by your mortgage broker to sign your loan docs so you can take possession of your new home.
Before signing any loan docs make sure they say exactly what you and your mortgage broker went over when you decided on what mortgage program was best for you.
I hope this has been of some benefit to you, good luck
"FIGHT ON"
you need a good realtor.
Ok
I am a first time home buyer and have no idea what I'm doing. I hear about these credits that can be used. How do I go about doing that. Are there limitations, income or house type, size, or price? How do I choose a realtor and do I have to have one? Do I go to the bank myself? Are there better places to get a mortgage from?
