Home Buying Process – Helpful Tips for First Time Home Buyers

If you are a first time home buyer or haven’t bought a home in a while, this guide will offer valuable information about buying a home.

Gather the information you will need to qualify for a home mortgage

Before you can buy a home, you will need to secure financing. Be ready to provide a mortgage lender with the following information:

Income and Employment

• What is your current income?  
• Are you employed?
• Do you have a history of steady employment?  

Down Payment

Your lender will ask how much money you have available for a down payment. A down payment of 20 percent or more of the home purchase price demonstrates your commitment to long-term home ownership and provides you with immediate equity in a new home.

Credit History

Your lender will review your credit history and how well you’ve paid your bills in the past  by reviewing your credit report. The lender will consider how much you owe on credit cards, car payments, student loans and other debt. The lender will also review your ability to pay property taxes and other expenses of home ownership.

Escrow Accounts

Your lender may suggest that you set up an escrow account. With an escrow account, you pay a fixed amount each month in addition to your mortgage payment to an account maintained by the lender. The lender then draws on that account to pay property taxes and homeowners insurance as those bills become due. Escrow accounts ensure that money will be available for these payments.

 Find a Fannie Mae lender to get pre-approved for a mortgage loan

Remember that you are investing not just in a home but also in the mortgage loan that will finance your home. Talk with several lenders and shop carefully for the best deal, including loan terms, interest rate and fees. You can use Fannie Mae Find a Lender tool to locate lenders who can answer your questions and work with you to qualify for a mortgage.

The lender you choose will review your financial information and explain the pre-approval process. While pre-approval is not a mortgage commitment or guarantee, it will provide guidance on what you can afford to spend on your new home. Having a pre-approval letter to show to a seller demonstrates that you are a serious buyer. When you are ready to buy, it will shorten the time it takes your lender to complete the mortgage application process.

Make sure your lender explains all loan fees, the up-front costs of originating, processing and closing the loan.

 Select your new home

With your mortgage pre-approval in place, you are ready to begin your search. You can check online and your local newspaper for homes for sale in your area.  A real estate professional can help you find a home that meets your needs and your budget. A licensed agent has access to the Multiple Listings Service (MLS) which generally offers the most comprehensive list of homes for sale.

In many communities, foreclosed homes offer an affordable home buying option. You can search Fannie Mae’s foreclosed properties at HomePath.com. Many of these homes offer flexible HomePath financing, which is available only on Fannie Mae homes. Learn more about HomePath financing and find a HomePath lender.

Avoid Predatory Lending

When shopping for a mortgage loan, home buyers need to be aware of predatory lending practices. These unscrupulous activities can increase the cost of home ownership and rob the borrower of equity in the home. Many predatory practices are illegal.

Predatory lenders may mislead the borrower about the true cost of a mortgage loan, fail to provide legally required disclosure documents or add unexpected, unnecessary and excessive costs at settlement.

Unethical lenders may involve borrowers in mortgage fraud by asking the borrower to provide false information on the loan application or leave important line items blank on the application. Fraud can also involve inflated home appraisals and the misuse of mortgage funds.

The best protection against predatory lending and mortgage fraud is to shop around for a mortgage loan. Ask questions and get explanations so that you have a complete understanding of the loan. Be sure you know the total borrowing cost over the life of the loan.

Free Information on Buying a New Home

100 Questions & Answers About Buying a New Home (English) CLICK HERE

100 Preguntas y Respuestas Acerca de la Compra de una Vivienda Nueva (Spanish) PRSIONE AQUI