Justin Jones, AVP- Lending
Homeownership means a lot of different things to different people, especially when you think of first time homebuyers. For some, it is a part of the American Dream, or maybe it is a financial investment, or it might be a chance to try your luck as the next HGTV renovation star. Homeownership is a decision that will have an impact on the rest of your life. It is important to make an educated decision going into the process and know the steps of the process. One of the roles of a loan officer is to educate you and help you put together a road map to homeownership. Each borrower will have a unique path to homeownership, but here is a general look at the pit stops on the road map, some things to consider before buying a home, and some tips for making the transaction smooth.
What does the process look like?
- Apply online or call us at 859-219-2900 to speak with one of our experienced loan officers to be pre-qualified. We will get some basic information and check your credit. We will discuss loan options that are available to you.
- Partner with a real estate agent to find a home. If you need help finding a real estate agent, let us know, and we can refer you to a trusted partner. The best part is the seller covers their commission, so their service is free to you!
- Submit your file to underwriting. Once a purchase contract is signed, things really begin to move. We submit your file to underwriting, we order an appraisal, and you begin looking for homeowners insurance. If the underwriter needs to verify additional information, we will let you know.
- Clear to close. Once the underwriter verifies your application, financial information, and title and appraisal your loan is approved.
- Closing time! We schedule closing that is convenient to the buyer and seller. You will sign a lot of paperwork and exchange keys. There you have it! Your journey to home ownership is complete.
Things to consider:
- What makes up your monthly payment? Principal, interest, homeowners insurance, and property taxes. You also may be required to pay mortgage insurance or Homeowners Association Dues. Also, consider the utilities that come with your new home. It is important that you are comfortable paying your monthly payment and expenses.
- No more landlords! This is typically a great part of being a homeowner; you have full control of YOUR property! One negative is when something breaks, it is your responsibility to fix it. So, keep that in mind. Some repairs will require a professional, and you can use some repairs to fine-tune your DIY skills.
- Don’t be house poor. This refers to having a monthly house payment that is too large and prevents you from having discretionary income. It is important to think about the big picture. To quote Dave Ramsey, “Make sure your new home is a blessing, not a curse.” Review your budget to make sure you can invest in your retirement and pursue your passions, such as traveling.
- Down payments do not have to be 20%. This is a common misconception. We offer several different loan products, but the main four are below. All require less than 20% down payment. Also, down payment assistance programs are available at different times throughout the year. Below is a list of a few of the programs with required down payments we offer:
- Conventional – 3% Down Payment
- FHA – 3.5% Down Payment
- VA – 0% Down Payment
- Rural Housing – 0% Down Payment
Tips for a smooth transaction
- Provide your financial documents during the pre-qualification process. The more information we have upfront,the less issues will arise down the road. Below is a list of financials we recommend providing to get started:
- 2 years tax returns
- 2 years of W2s/1099s
- 2 most recent pay stubs
- 2 months of bank statements for any checking, savings, or retirement accounts
- Don’t open any new credit until the process is complete. This can cause huge issues. During the pre-qualification process, we check your credit report and, in a sense, take your financial picture. It is important that the picture remains the same during the process, or it can change your eligibility.
- Communication. During the COVID – 19 pandemic, things are rapidly changing, and the mortgage industry is no different. So, it is important that, if changes happen to your job or income source, you let us know ASAP. We will also pass along any new information that may affect your situation.
With a solid team to guide you through the process, the path to home ownership can be a breeze! Bank of Lexington is here to partner with you, so you can achieve home ownership. If you are ready to have a conversation about what your path to home ownership looks like, please call us at 859-219-2900 or apply online today!