First-Time Homebuyers: The Mortgage Process Is Easier Than You Think

Like so many things in life… the first time is the worst.

We’re talking about homebuying, of course! 🤣

Congratulations on deciding to buy a home! You are a smart cookie- owning a home gives you more certainty in life (your home payment will never increase with your landlord’s expenses, for example!), and you’ll immediately increase your wealth upon the purchase of such a large asset 💸

The average homeowner has a household wealth of $231,420; the average renter…$5,200 😲

But if you’ve never bought a home, the mortgage process can be intimidating. You might ask your parents or friends who are homeowners what the process is like; their answers may be too vague, or unhelpful in another way, and now you feel intimidated and confused 😬😳

But don’t worry! There are actually only a few basic steps to the mortgage process, and you have a superhero on your side- your mortgage broker. Your broker’s job is to keep track of due dates and checklists for you! 😁👍

Here’s how your mortgage process will go:

Interview a Mortgage Broker or Three

Consultations are free; if you don’t have a mortgage broker you trust already, call several. Ask questions like, How long does the mortgage process take for you, from consultation to signing? Are most of your mortgages signed on time? What’s a typical interest rate if my credit score is XXX? What types of mortgages do you typically do? For example, if a broker specializes in a VA loan and you’re not a former servicemember, that broker would not be a great fit for you 🤔

But the most important thing you’re looking for here, is a person you trust and get along with. You’re sharing your financial details with this person; make sure you like him/her 😄

Share Your Financial Details

Your broker will ask you for a list of financial information, from bank statements to tax returns. Don’t worry, though; your broker will never discuss your financial details with anyone else, and even if you are shy about sharing such information, remember, your broker has actually seen it all, and none of us feel like we’re in the financial position we “should” be in, or even want to be in! 😁

Your broker may make suggestions- pay off this credit card, repair your credit, build up a little more in savings, etc. Take their suggestions seriously; this is their area of expertise, and they have your best interests at heart 😊

Your Broker Pre-Qualifies You

After getting your financial details, your broker will give you two things: an estimate of how much house you can really afford, and a pre-approval letter

Excellent! Now you have proof, in the form of a piece of paper, that you can buy a house 📜😄

Go House Shopping

This is the fun part for most people, and your realtor will help you with this part; your broker isn’t involved here 🏠

Once you find a home, make an offer, and your offer is accepted, then tell your broker.

Your Broker Shops Rates For You

At this point, your broker will run some numbers for you, and present you with two to three mortgage options. Your broker will counsel you on the pros/cons of each option, as well as the total cost of each loan option ⚖️

They can offer creative suggestions- for example, one mortgage broker counseled a friend that if she put $6,000 more into the down payment, her interest rate would decrease by over a quarter of a percent! It’s a course of action that never would have occurred to her, but that helpful suggestion will save her $58,000 over the life of the loan 😮🤯

Other pros/cons might be a mortgage with a slightly higher interest rate, but will require less cash at closing.

Your Broker Submits Your Application

Once you select which mortgage is best for you, your broker will submit your mortgage application. He/she should already have all the information needed for the actual application 🙂

Hurry Up and Wait

Once your application is submitted, the mortgage company will process your application. This is a waiting period for you…

Just kidding! 🤣

You are waiting for your mortgage loan to be processed, but you’ll still be busy. Your new home is being inspected, appraised, etc; you’re figuring out if you need movers, when you’ll pack, etc. There are lots of little details to take care of, but your mortgage isn’t one of them, thank goodness! 😅

During this period, your broker may ask you for more information periodically- a recent pay stub to prove you’re still employed; copies of bank statements to prove you’re still paying your rent on time, etc. These are routine inquiries; respond to these requests as quickly as possible to make sure your closing is not delayed 👍

The Big Day

Woot! You’ve made it to closing! Rest up the night before, hydrate, and do some hand exercises, because you’ll be signing your full legal name approximately 3,256 times during your closing 😆

Congratulations! You’re now a homeowner! 🎉🏠

Here was a simple breakdown of the mortgage process. Knowing what to expect will allow you to act with more confidence when buying your first home. Your mortgage broker is a really important player in this process; all the things he/she does for you behind the scenes are key to your success, so make sure you know, like, and trust your broker 😁👍

Now That’s Smart Money 🧐