If you are a first time home buyer, you are probably excited, nervous and have a whole lot of questions about the entire process. Buying a home is a big decision and we want to be here to help you out along the way.
The first thing you want to do is prepare and review your finances. Your credit score is very important when discussing finances with a lender so you want to do whatever you can to make sure it’s at the highest it can possibly be. You will also want to review your credit reports to make sure any derogatory marks on there have been fixed if they can removed or disputed.
Another part of financing that some first time home buyers don’t take into account is a down payment. Many first time home buyers don’t have a large down payment, so they may think that means they have limited options to buy a home, or that they may not be able to buy a home at all. Of course the larger the down payment, the less the monthly payment will be. However, saving for that large down payment takes times, and that means mortgage rates and the market can change as well. But there are still options for those that don’t have that 20% down they think that is required.
What is Escrow Exactly?
One of the the terms you will hear when discussing financing is escrow but if you’ve never purchased a home, you may have no idea exactly what it is or what it means to you. Escrow happens between the time the seller agrees to the terms of the buyer and the buyer gets the keys, also known as closing.
In order to keep things simple between the buyer and the seller, an escrow account is held by a third party while the final arrangements are being completed on the home buying process. There are certain obligations that have to be completed until the house is considered purchased, and during that time, the house is “in escrow”.
You may have heard of people being in escrow for a long time or a short time and that is because the escrow process can be affected by missing documents or even from state to state. You will also need to open an escrow account once the seller and buyer agree to the terms of the purchase.
Once the appraisal has been completed, you will need to get an estimate from your lender. You will need to secure financing from a lender before moving forward with the contract. Although an inspection is not required, it’s always a good idea to set one up before making the final arrangements and moving into the home. If you find any issues during your inspection, you may want to negotiate with the seller when it comes to the price of the home.
Two things that are required by your lender will be title insurance and title reports. The title report makes sure the title is clear and the title insurance protects you and your lender from any future issues with the title.
Once you’ve completed the final walk through, you will get a HUD -1 Form which shows the final loan terms and closing costs. The closing process involves a lot of paperwork and you will want to make sure to discuss any concerns you have with your real estate agent. Once you complete your paperwork and submit your down payment, you will be all set to take possession of your new home.
Call Us Today
We know that being a first time home buyer comes with a lot of ups and downs but we want to help you along the way so that the process can be as rewarding as possible. Reach out to us at Family First Mortgage, LA today!