Tips for a Smooth Homebuying Experience

Buying a home, especially for the first time, is a major life milestone. Feeling confused or a little overwhelmed is completely normal, but like most things in life, the more you know the easier it gets. These expert tips can help you feel more confident and prepared as you go through the homebuying process.

How to Start the Homebuying Process

One of the best things you can do before you begin your search for your new home is to get preapproved for a mortgage. The preapproval process is free, relatively easy and most importantly, will help you understand exactly how much house you can afford. You can do it online, but if it’s your first time you may find it helpful to talk to a mortgage loan officer instead.

When you start the preapproval process you should have these documents ready:

• Two years of W-2s
• Your most recent paystubs
• Two months of statements for your assets, including retirement funds

This will help your loan officer recommend the best home loan options for your individual situation.

Getting preapproved for a mortgage loan will give you a clearer picture of:

• Your total monthly payments
• The terms of your loan
• How much money you will need for closing

It will also show sellers that you’re serious about buying a home and that you have funding secured.

Your mortgage loan officer also can work with you to create a budget and help come up with a plan to purchase in a price range that both meets your needs and matches the lifestyle you want to live.

Once you have a preapproval letter in hand, you’ll be prepared to make an offer on a home.

Why Should You Work with a Realtor®

It’s important to work with a qualified real estate professional that you trust and connect with.

That’s especially true if you’re a first-time homebuyer or are moving to a new neighborhood or state. These experts have the experience and knowledge necessary to understand local trends and help you avoid costly mistakes along the way.

To ensure the process goes as smoothly as possible, interview a few different Realtors® or agents, and choose the one that understands your wants, needs and concerns the best.

Choosing a Mortgage Lender

When it comes to working with a lender, make sure you have a thorough understanding of the process, the costs and the longer-term financial pros and cons.

Lenders are there to be a resource for you, so never hesitate to ask questions—even if you don’t think it will matter. A good loan officer will be happy to explain the basics, listen to your concerns and do their best to make sure you walk away feeling good with your decision.

Likewise, keep them informed about anything that changes with your life (new job, new credit, etc.) or your real estate transaction. It might make a difference, and the sooner they know, the sooner they can find a solution for you.

Should You Consider Adjustable-Rate Mortgages (ARM)?

Home prices have edged up in the last few years and housing inventory is tight. For some home buyers, that may mean that a house they could have purchased with a fixed-rate home loan a few years ago may now be out of reach.

In these situations, it may make sense to look at adjustable-rate mortgages. ARMs can offer a lower rate and slightly more flexibility in the amount you qualify to borrow. ARMs may also make more sense if you’re not planning on staying in your home for life—for example, if you’re buying a starter home.

What to Know About Down Payments

You may have heard that the “conventional” down payment is 20% of the home’s purchase price. The reality is most homebuyers make lower down payments. In fact, it’s possible to buy a home with as little as 3% down. It all depends on your individual situation.

On the one hand, a 20% down payment can help you make lower monthly payments and gain more equity in your home. By putting 20% down, you also won’t have to pay private mortgage insurance (PMI). However, for many home buyers, coming up with a 20% down payment can be a challenge.

With a smaller down payment you can avoid draining your savings account, so you’ll have money left to comfortably pay for closing costs, insurance, taxes and extra repairs or upgrades after you move in.

If you need extra help making a down payment on your home, your mortgage loan officer can help you explore down payment assistance programs that are available in your area. Even if you aren’t sure you’ll qualify, it’s worth asking—you may be pleasantly surprised.

Additional Costs to Consider When Planning Your Home Purchase

Many homebuyers focus solely on the down payment when estimating what they will need to purchase a home, but there are other costs that you should plan for.

Besides the down payment, buyers need funds for:

• Closing costs that can range from 2% to 5% of the loan amount
• Homeowner’s insurance
• Property taxes

It’s also important to keep in mind that you may need additional funds for furnishing your new house or making updates that match your style, like painting, redoing floors or upgrading appliances.

Must-Haves and Nice-to-Haves

One thing that can help buyers is knowing what features they must have in a house, and what features they can compromise on or live without.

Write up your own list of “must-haves” and “nice-to-haves” before you begin your search so you can make the best use of your time. Be sure to share this list with your real estate agent. This will help ensure the homes you see will be the ones you’ll be happiest with long-term.

Ready to buy? Get in touch with our local mortgage lending experts or get preapproved. 

Still researching? Explore our Mortgage Learning Center.