First-Time Homebuying Guide

Whether you’re buying a house for the first time or moving to a new home that’s right for you, we’re here to help! From preparing your finances to your closing date and beyond, we’ll help you understand everything you need to know when buying a home.

Step 1: General Advice

(Approximately 1 year out)

The better prepared you are for buying a home, the less stressful it will be.

  • Create a list of needs and wants, including specific examples like "Need: Enough bedrooms for family size" and "Want: A backyard for our dog".

  • Understand your finances and credit score.

  • Develop a budget around a payment you can afford.

  • Consider a My First Home Savings Account to help you save for a downpayment.

  • Mentally prepare for the emotional aspects of homebuying (dealing with stress, making decisions).

  • Research housing market trends. Learn about current market conditions in the area you would like to live.

Step 2: Learn Basic Homebuying Guidelines

(Approximately 6 months out)

This includes understanding how much home you can afford, mortgage options available to you, and homebuying assistance programs.

  • Schedule an initial consultation with a Mortgage Loan Officer.

  • Understand your Debt-to-Income ratio, which is a calculation of your monthly debt payments divided by your gross monthly income.

  • Ask your Mortgage Loan Officer to help calculate how much home you can afford with principal, interest, taxes, and insurance.

  • Make sure your proposed mortgage payment fits within your budget.

  • Gain insight into your potential qualification.

  • Know the difference between pre-approval and pre-qualification.

  • Learn different down payment options available (conventional, FHA, VA) and their implications.

  • Understand the different loan options available to you (FHA, VA, and conventional loans).

  • Explore fixed-rate vs. adjustable-rate mortgages.

  • Improve your credit score before applying.

  • Know the impact of different types of debt (credit cards, auto loans, personal loans) on mortgage approval.

Step 3: Implement a Financial Plan

Now that you've learned approximately how much home you can afford, it's time to put a plan into action.

  • Avoid incurring new debt, changing employment, and making large purchases.

  • If you're renting, align your lease termination with your new purchase timeline.

  • Use Goals & Budgets to regularly review and adjust your budget to ensure it aligns with your financial goals.

  • Use Savings Goals to visualize and keep track of your savings progress.

  • Prepare for unexpected expenses with an Emergency Savings Account.

  • Set up automatic transfers to your savings account to help you reach your goals.

Step 4: Get Pre-Approved

When you get pre-approved, you’ll receive a letter from your lender that says how much you can borrow at a certain interest rate and shows a more committed step towards securing your mortgage.

  • To get pre-approved, your Mortgage Loan Officer will request you complete a formal mortgage application and pull your credit report.

  • Next, your income and asset documents will be collected, make sure your Debt-to-Income ratio is appropriate, and that you have sufficient funds for closing.

  • To get approved, your Mortgage Loan Officer will also analyze your credit score and history for eligibility.

  • Ask your Mortgage Loan Officer about the required documents needed and timeframe of getting pre-approved.

  • It's important to remember that this is not a final decision for your mortgage amount, and you still need to go through the full application and underwriting process before you can close on your loan.

Step 5: Find a Realtor & Go Shopping

Now for the fun part! It's time to start shopping for your dream home.

  • Find your home with our trusted team of Central Florida real estate agents to guide you through the home-buying process.

  • Understand the importance and role of a Realtor.

  • Interview Realtors to find the right option for you. Ask questions about their experience, communication style, and local market knowledge.

  • Understand how Realtors are compensated.

  • Explore different home search strategies like open houses, online searches, and working with a Realtor.

  • Attend open houses to familiarize yourself with different properties and neighborhoods.

Step 6: Go Under Contract

Once you've found the right home in your budget, it's time to make your offer.

  • Here are a few key items to negotiate and consider:

    • Closing date

    • Sales price

    • Closing costs

    • Realtor commissions

    • Title company

    • Earnest Money Deposit (EMD)

    • Inspection period

    • Sales concessions

  • Discuss the typical amount expected for an Earnest Money Deposit and how it works.

  • Understand the role of a title company in the homebuying process.

    • A title company ensures that the title to a home is legitimate and can help transfer ownership from the seller to buyer.

    • Title insurance protects both the seller and buyer from potential legal issues related to a property's title.

    • A title search will provide a history of the property's ownership and make sure there are no hidden surprises that could affect your ownership rights.

    • In the closing process, a title company will conduct the title search, issue title insurance, manage escrow accounts, and facilitate the closing.

Step 7: Home Inspection and Insurance

Before you move into your home it's important to make sure you're protected from unexpected problems and expenses.

Step 8: Appraisal

  • Understand the purpose of an appraisal.

  • Learn what to do if the appraisal comes in low, high, or at value.

  • Preparing for the Appraisal: Ensuring accurate valuation.

  • Disputing a Low Appraisal: Steps to take if the appraisal is unsatisfactory.

Step 9: Underwriting

  • Role and responsibilities of the underwriter.

  • Ensure qualifications and compliance.

  • Common Underwriting Conditions: Expectations and resolutions.

  • Underwriting Timeline: Typical process duration.

Step 10: Closing Preparation

  • Understanding the Closing Disclosure (CD).

  • Set up biweekly payments to help you pay off your home faster.

  • Document Checklist: Provide a checklist of documents buyers need to bring to closing.

  • Wire Transfer Safety: Emphasize the importance of wire transfer security and methods to avoid scams.

  • Reviewing the Closing Disclosure (CD): Understanding fees and charges.

Step 11: Closing Day

  • What to expect.

  • Signing Documents: Expectations and time frame.

  • Receiving the Keys: Access to your new home.

  • Final Walkthrough: Checklist before closing.

    • What to check before closing.

    • Handling last-minute issues.

Step 11.5: Homeownership 101

  • Routine maintenance checklist for new homeowners.

  • Understanding property taxes and homeowners association (HOA) dues.

  • Learn energy-saving tips for your new home.

Step 12: Payment Setup

  • Make Freedom Payments to pay down your principal balance in addition to your regular monthly mortgage payment and pay off your home faster!

  • Set up automatic payments so you never forget about paying your mortgage!

  • Learn how biweekly payments can save you thousands.

Step 13: Escrow Analysis

  • Explanation of escrow.

  • Reasons for changes in mortgage payments.

  • Frequency of these changes.

  • Annual Escrow Review: Preparation and expectations.

  • Managing Escrow Shortages or Surpluses: Steps to address discrepancies.

Part 14: Loan Payoff

  • Methods to track your balance.

  • Payoff events such as refinancing, selling your home, or becoming debt-free.

  • Early Payoff Strategies: Accelerate mortgage repayment.

  • Refinancing Impact: When refinancing is beneficial.