Home ownership is a huge step. If you’re a first time home buyer in Tennessee, you may feel a little intimidated by the whole process. Real estate agents can provide some guidance, but mortgage lenders are also a vital resource.
Luckily, Accurate Mortgage Group is here to let you know what to expect as a new homeowner!
Read on to learn more about the steps of the home purchase process, straight from a Nashville mortgage lender.
To begin the home loan process, contact an Accurate Mortgage Group Loan Advisor today and let a seasoned professional help you get started. Together we can determine the best loan options for your situation. It only takes a few minutes to complete the initial questionnaire and, in most cases, we can quickly have a Verified Buyer prequalification letter sent to you if you want to make an offer on a home - sometimes even the same day!
In this phase of your life, it's important to navigate financial decisions with caution and determine an appropriate price range for a home. As a first time home buyer, you may not be aware of all the expenses that await you. In addition to the purchase price of the home and the monthly mortgage payments to pay it off, consider related expenses such as: closing costs, any government funding fees, if applicable, property taxes, homeowners insurance, regular maintenance, renovation, monthly HOA dues, or DIY projects. As they complete their home search, first time buyers should also factor in the additional cost of moving fees and new furnishings. Remember, being pre-approved for a certain dollar amount does NOT mean you have to purchase a house at that amount. It means that you’re allowed to borrow any amount up to the approved amount. However, if you do decide on a home that is less than the amount approved, there is no cash out financing on a purchase loan. Meaning, you don’t get to keep the difference. Be sure to look for a home in a price range, and a monthly payment amount, that fits comfortably within your budget.
These days, many first time buyers begin their search for a home online. However, many homes are sold before they ever hit the online listings! We recommend that you set up an appointment with a realtor to help you get started with your search. Once you have a few properties in mind, they’ll set up a time to view them. (If you’d like, we know many reputable realtors we’d be happy to recommend.) Don’t feel pressured to commit too quickly; it is not uncommon to view up to 20 homes before making a decision to put an offer on one.
Your realtor will negotiate with the seller’s realtor until an agreement can be reached. In most cases, the final price and closing costs can all be negotiated at this time. You will get the best deal if your realtor truly understands the market and can value the property correctly.
Next, your lender will talk to you about locking your rate, and will send the Initial Disclosures for you to e-sign. Once signed, then the loan process officially starts and the home appraisal is ordered.
Schedule a home inspection with a reputable home inspector. If issues are discovered, your realtor will help you negotiate the costs of any necessary repairs prior to closing. In the end, you may choose to have the seller repair everything, or you may choose to make some repairs yourself and purchase the house for a lower price. You can also withdraw your offer and get your deposit back.
We recommend you shop for coverage with several insurance companies to compare rates. (We’d be happy to offer recommendations here, too.) Bundling your home with your car insurance frequently offers a better rate. And, you may not know it, but insurance companies pull your credit score and use the FICO number to determine your rates on car and homeowners insurance. Just one more reason to have your credit in the best shape possible before purchasing your home.
There are many pros and cons to a home warranty plan, particularly depending on the age of your home. Consider your options and plan for the amount of time you anticipate being in the residence. Oftentimes, the realtor will ask the seller to provide this for the first year. After that, the buyer can choose to renew and continue coverage.
Congratulations are in order! This is the exciting day where you sign the documents and are handed the keys to your new home.
Establish a budget that you are comfortable with before purchasing the home. Know that there will be unexpected costs throughout the life of your home and have an emergency fund for these instances.
Use a trusted real estate agent to help you with your search and all negotiations. This can save you thousands of dollars over the life of your loan.
Don’t apply for new loans or any other consumer debt after being prequalified for your initial loan. This can affect your creditworthiness at closing time.
Don’t close on the house until all items on the punch list have been completed. Once the builder or seller has closed, you will have a very hard time getting them to complete any additional work, particularly small projects.
Carefully compare loan programs considering ALL costs. Different mortgage companies present costs in different ways, which can make it challenging to truly compare them. At Accurate Mortgage Group, we walk you through every detail of the loan and make sure you understand all costs associated with it.
A Nashville mortgage lender with years in the business, Accurate Mortgage Group helps you save money when house hunting. Check out some of these frequently asked questions we hear from people looking for their first home.
Down payment requirements depend mostly on the loan program and the price of the property you want to buy. The size of your monthly mortgage payment will also go up or down depending on your down payment. A good rule of thumb: the less money you put down on a home at closing, the more you’ll pay in interest in the long run.
The interest rate on a loan is closely connected to your credit score. The recommended minimum credit score for applying for a mortgage loan is 620. The average down payment is about 6% of the loan’s value. First time homebuyers will usually have lower down payment requirements if they qualify. However, it’s possible to buy a home with as little as 3% down depending on your loan type and income.
Throughout the course of a home purchase, numerous third parties (for example, your real estate agent and mortgage lender) render services. They must receive payment before the transaction is finalized. That’s where closing costs come in.
Home buyers and sellers may need to pay closing cost fees. Closing costs may include fees for underwriting, commissions, taxes, title and record filing, and insurance premiums, just to name a few possibilities. The majority of these closing costs derive from third-parties and are based on the purchase price and the county the home is located in, and will be the same no matter which lender is used. Within three days of receiving your mortgage application, lenders are required by law to provide you with a loan estimate document which also estimates the closing costs. For closing cost assistance, look into your state’s HFA (housing finance authority.)
If you’ve served in the military, you may be eligible for a VA loan. VA loans differ from conventional mortgages because they are partially backed by the Department of Veterans Affairs. This guarantee often results in private lenders giving home buyers better rates and terms, however the financing options are set by the VA. If you are considered 10% or more disabled by the VA, then the VA funding fee is waived. This one-time charge is an administrative fee that is rolled into the mortgage. Another benefit of VA loans is that they can go up to 100% of the purchase price and never have mortgage insurance (PMI).
If you already have a VA home loan, you could get an interest Rate Reduction Refinance Loan (IRRRL) to reduce or stabilize your monthly payments.
The U.S. Federal Housing Administration is a government agency that provides financial assistance in the form of FHA loans. In the FHA loan program, you can qualify for a loan depending on your financial situation.
Here’s why FHA loans are especially popular for first-time homeowners:
FHA loan limits define how much you can borrow for a HUD-backed mortgage (U.S. Department of Housing and Urban Development). Each county has different limits. Your mortgage Loan Advisor can tell you what is available for your FHA home loan. Give us a call today to learn more.
A USDA loan features the lowest funding fee of all government loans and no down payment requirements. The U.S. Department of Agriculture (USDA) offers these loans to low- to moderate-income individuals living in small towns or rural areas near metro Nashville. For example, this includes areas such as Lebanon, parts of Mt. Juliet, Ashland City, Columbia and White House. The Rural Housing Service (RHS) allocates funds to qualified applicants looking to purchase modestly priced homes as their primary residence. Accurate Mortgage Group’s USDA loans terms are available for 30 years.
There are many different types of loans available for first time buyers. For more loan options and loan programs, reach out to the Mortgage Loan Advisors at Accurate Mortgage Group by calling (615) 709-5654.
If you need help navigating the home loan process, we’re here for you. Call or text (615) 709-5654 to explore your options and secure your dream home with guidance from Accurate Mortgage Group.