You're about to start the journey along the path to homeownership. Buying a home is an exciting adventure and it's probably the biggest purchase you'll make in your lifetime, but the trek to becoming a homeowner is no simple day hike. The good news is we can help guide you on your journey. Our goal is to help you become a well-educated homebuyer. Here are a few steps you will need to learn about the homebuying process, from getting your mortgage to receiving the keys to your new home. Flat Branch Home Loans would like to help you navigate through buying a home of your own.
Step 1 : Getting Prequalified
When we're determining if you qualify for a loan and what amount you qualify for, we look at your credit, income, assets and debt. We also look at two ratios: the loan-to-value (LTV) ratio, which expresses how much you’re borrowing compared to the value of your home. A lower LTV is more favorable, because it represents less risk to the lender. The other ratio is the debt-to-income (DTI) ratio, which shows how much debt you have in comparison to your monthly income. This debt includes credit card bills, auto loans, alimony or child support, and other regular monthly payments. The lower the DTI, the better chance you have to qualify for a loan. Knowing how much you can afford to pay each month toward your mortgage will help you as you begin your search for a new home. Your credit, LTV and DTI all contribute to determining your budget and your loan amount.
Step 2 : Cash
Before you buy your home you will need earnest money and down payment cash. You may have heard the myth that you need 20% down to purchase a home, but there are programs that require as little as 3.5% down, or even no money down options. Contact us to learn more.
Payment Breakdown
Your monthly mortgage payment consists of three things:
- Principal: The actual amount you are borrowing
- Interest: The amount it costs to borrow money for your home
- Escrow: A third party account used to pay taxes and insurance
Closing Costs
You will have to pay closing costs when the ownership of the home is transferred. Closing costs are a one-time payment for when you close on your loan. The cost will vary, but these are some of the items typically included:
- Appraisal fee
- Origination fee
- Recording fee
- Title service fee
- Transfer taxes
Keep in mind that this is not an exhaustive list. You can negotiate these fees with your seller, but we can also discuss how to minimize the impact of these fees.
Step 3 : Find A Home
It's time to start shopping! Once you find a home, we will work together to make it yours. Let the adventure begin!
