First-Time Home Buyers
A house is more than four walls. It becomes a home full of memories and your most cherished belongings — your grandmother’s dining room table, your childhood collection of baseball cards, or the worn hardwood floor where your daughter took her first steps.
At Solarity, we offer more than a home loan because we understand how important this purchase is for you. Your dedicated Mortgage Loan Officer will get to know you, guide you toward the type of loan that best suits your needs, and walk you through the process of buying a home. We offer a variety of loan types so that we can match the right product that supports your needs. We’ve also created this checklist to help you plan.
I have been with Solarity for more than twenty years and have always been very happy with the service and support I have received. From vehicle loans to handling my mortgage, I have always experienced exceptional service.”
First things first: Are you ready to buy?
Buying your first home is a big deal. There are great advantages to owning a home but there are also a lot of responsibilities associated with ownership as well. Here are some questions for you to think about when considering if you are ready to purchase a home:
- Do you have a steady income you can count on?
- Do you plan to stay in your new home for at least a few years?
- Have you saved for the up-front costs of purchasing a home?
- In addition to your mortgage loan payment, can you also afford property taxes, home insurance premiums, and utilities?
- Will you have an emergency fund to take care of repairs?
- Are you prepared to keep up with maintenance, yard work, and other responsibilities of homeownership?
What would your home loan look like with Solarity?
The home buying process
We’ve found that the home buying process goes much smoother if you know what to expect. Here are the key steps you’ll take.
Step 1: Pre-qualification
Simply talk to one of our Mortgage Loan Officers or apply online to decide which loan is best for your needs. We’ll provide a range of options based on your income, how much you owe, and any goals you’d like to meet. You will walk out of the door with a pre-qualification for your loan. You can also pre-qualify yourself online, for free. Just fill in the type of loan you want, the purchase price and down payment, your monthly income and debt, and the balance on all of your credit cards. You’ll see an estimated interest rate, monthly payment, and other details.*
You can save or print this checklist to help you plan.
Here is the information you should bring to the appointment or have on hand when pre-qualifying online:
- Your current address and any other addresses for the past two years.
- Driver’s license
- Two months of bank statements
- Social Security numbers for all borrowers.
- Your employment history for the past two years.
- Most recent 30 days of paystubs and last two years’ tax returns, both personal and business.
- Information about your current debts.
- A copy of your current mortgage statement if held by another lender.
*Legally subject to underwriting the home you are refinancing and verification of the information you’ve provided us on your application.
Consider pre-qualifying before talking to a real estate agent, so you both have a good idea of the price range you can afford.
Step 2: Making an offer
When you find a home that feels right, your agent will help you make an offer in writing and submit it to the sellers. You’ll include earnest money, a fixed amount that shows your offer was made “in earnest.” Earnest money is kept in escrow until closing and is usually counted as a credit toward your closing costs.
In most cases, the seller has 24 to 48 hours to consider your offer or propose a change with a counter offer. If you have an agent, he or she will negotiate the offer and create documents on your behalf.
If you’re selling at the same time, consider making your offer contingent on the sale of your current home. However, this might not work in a competitive market. Instead, you may be able to negotiate a rent-back, which allows you to rent your current home from the new owner for a period of time.
Step 3: Processing your loan
Once your offer has been accepted, we’ll request documentation to verify your assets and income. In addition, we’ll order an appraisal from a third party, title report, and flood certification for the home. You will pay a processing deposit for these services, which will be applied toward your closing costs. We’ll also set up escrow for the loan closing and send you disclosures to read.
Your agent will likely advise you to make your offer “contingent on inspection.” This means your offer isn’t valid until the home has been carefully examined by a qualified home inspector. Your inspector will check out the property from top to bottom, including its foundation, plumbing, electrical systems, and roof. If issues arise, your agent may negotiate for repairs, an adjustment in the sales price, or cash back at closing.
Step 4: Underwriting
We’ll prepare a closing disclosure which summarizes the final numbers for the agreement, as well as confirm your financial situation and property align with federal mortgage guidelines. Regulations that protect consumers require a three day wait before the documents can be signed to allow you time to consider and review the terms of your loan.
Step 5: Closing
We’ll prepare the loan documents and send them to an escrow company. You’ll make an appointment with the escrow company to sign the paperwork at their office. Once we’ve received the signed documents, we’ll transfer the money to the escrow company, which will disburse the funds and record all documents.
What happens next?
Have questions about payments, taxes, insurance, auto payments or anything else? Our Contact Center will be able to help. Get in touch with our Contact Center.
Finding the perfect home
There are a lot of options to consider when choosing your first home. Here is a list of things for you to think about when putting together your wish list:
- Price range
- Type of home such as single-family, condominium or apartment.
- New construction or resale.
- Ideal number of bedrooms and bathrooms
- Specific features like a garage, pool, year, or formal dining room.
- One story or multiple stories
- School district
- Traffic and distance from important locations like work, school, or family.
Terms to know
- Adjustable-rate mortgage (ARM): A kind of home loan where your interest rate is tied to a market index. As the index goes up or down, your interest rate and payments will also change at each scheduled adjustment period. These loans generally start out with an interest rate lower than a fixed-rate loan. This saves money initially and may help you qualify for a larger loan.
- Amortization: Gradually paying of a debt by making regular payments over a period of time.
- Annual percentage rate (APR): A measure of both the interest charged as well as any other costs associated with the loan. APR is designed to show you the total cost of the loan, which is important when comparing loans and evaluating if a loan is right for you.
- Buyer’s agent: A real estate professional who represents the buyer in a purchase of a home. Typically, there is no cost in working with a buyer’s agent because commission is paid by the seller when the house is sold. Be sure to discuss any compensation before you start looking at homes with your buyer’s agent.
- Closing costs: Fees paid to the financial institution or third parties for services to process the application and for the closing process.
- Collateral: Something of value used to secure a loan. For a mortgage loan, the home serves as the collateral. The property becomes the property of the financial institution if you are unable to pay your loan.
- Construction draw period: The period during construction in which funds can be drawn to pay the builder.
Construction permanent loan: A single loan that covers financing during the construction phase, as well as your permanent mortgage loan.
- Credit rating: A score given by a credit bureau that helps the financial institution determine your ability to repay a loan. Factors include your history of paying your bills, outstanding debt, credit history, variety of credit and history of application for credit.
- Default: When a borrower is unable to make payments on a loan or fails to meet requirements of the terms of the loan.
- Discount points: An upfront fee that lowers your interest rate.
- Down payment: The amount of the purchase price of your home that you pay in cash up front.
- Equity: The difference between the market value of a property and the owner’s outstanding mortgage balance.
- Escrow: A neutral third party that holds the money until all terms of the agreement has been met.
- Earnest money: A deposit you give to the seller when submitting an offer to show serious intent about buying a property.Interest rate: The cost of borrowing money.
- Fixed-rate mortgage: Type of home loan where interest rate remains the same for the length of the loan.
- Home inspection: Visual examination by a certified third party to provide an accurate estimate of the home’s value and condition.
- Homeowners’ insurance: Insurance that protects your property against loss from theft, liability or other disasters. Typically it is required for an amount equal to the mortgage loan.
- Interest rate: Percentage you pay for the loan to the lender.
- Jumbo loan: Loans that are more than the limits set by the Federal National Mortgage Association or Federal Home Loan Mortgage Corporation guidelines.
- Loan origination fee: A fee paid to a lender for processing a loan application. This is shown as a percentage of the mortgage amount and is due at closing.
- Monthly payment: The amount you pay for your loan (principal and interest) each month.
- Mortgage loan officer: Employee who serves as your guide through the process and who helps you select the loan that meets your needs.
- Private Mortgage Insurance (PMI): Insurance that protects the lender if a borrower defaults. Usually required if the down payment is less than 20 percent of the purchase price.
- Permanent mortgage loan: The loan that is finalized at the completion of construction. It includes regular monthly payments of both principal and interest.
- Rate lock: Guarantee of a interest rate for a defined period of time.
- Real estate agent: A person authorized to act on your behalf when purchasing a home.
- Rent-back: An agreement that allows you to rent your current home back from the new owner for a period of time.
- Seller’s agent (Listing Agent): Real estate professional that represents the seller. You generally won’t work with the seller’s agent, as the buyer’s agent will coordinate on your behalf.