First Time Home Buying

The first step in your journey to home ownership is to ensure that it's financially feasible for you to buy a house. Can you pay the up-front costs of purchasing a house, as well as the ongoing monthly mortgage and other living expenses? 

Consider asking the following questions:

• How much home can you afford? Our Mortgage Affordability Calculator can help you determine how realistic it'd be to pay a monthly mortgage on your income.
• What's your monthly payment? Use our Mortgage Estimation Calculator to see what mortgage you can afford based on your preferred payments, loan term, and interest rate. 
• Should you continue to rent or buy? They say there's no place like home, but does that mean you have to purchase one to get the benefits? Read this Banzai article to help navigate the pros and cons of becoming a homeowner.

After you've checked your financial health to make sure you can afford to buy a home, you'll need to decide on the right loan for you. 

You'll also want to begin gathering up all the information you'll need to apply for and close your loan. Collect the information listed below and you'll be ready for the next step. 

Here's what you'll need:

• Name, current address, social security number
• Employment information for the past two years
• Monthly income for you and your co-borrower, be prepared with your most recent pay stub(s) with year-to-date income and past tax returns. 
• If you are self-employed, you will need the last two years' tax returns for you and your business. 
• As part of closing, we will have to verify all funds that you receive; so it's a good idea to get together any documents that will verify proof of receipt or deposit for funds, like gifts and trust accounts

Pre-approval means that you fill out a loan application and provide all your salary and credit information. We then check your assets and pre-approve your capability to get a loan.

When you find your dream home, you can present the seller with your pre-approved loan document, showing them that not only are you serious about buying their house, but you've already been pre-approved for financing.

It could make the difference between getting the house you want or watching some other bidder step in with a pre-approved loan and snatch that house away. Pre-approval is good for 120 days and depends on the appropriateness of the property you want to purchase.

Ready to start? Get Pre-Approved today!

If you don't already have a home picked out, make a list of all the things you want in a home. Be as specific as possible because it will save you time in your search for a new home. Once you've determined what's important to you, your real estate agent can help you find the perfect home.

Consider some of the following questions:

• Is the neighborhood convenient? 
  
  
• Is there a home owner's association?
  
  
• Is it convenient to commute to work?
  
  
• Is it close to family and friends? 
  
  
• Should you consider school districts in your search? 
  
  
• What amenities are most important to you in a home?

Take your time when thinking about where you're going to live. Finding the right realtor for you, will also help you through these questions. 

You've found a house you love. It has the perfect living room, or that playroom you've always wanted for the kids. But it's not yours, yet. First you have to make an offer, in writing, and submit it to the sellers. This is usually done through your agent and is accompanied by your earnest money, which is a pre-determined amount of money, demonstrating that your offer is "in earnest".

Follow the advice of your agent or lawyer when deciding how best to make your offer. Here are examples of some things your offer should include:

• The price you're willing to pay
• When you want to move in
• What kind of inspections you'd like to have (structural, electrical, plumbing)
• If your ability to buy the house depends on your ability to get financing (which is taken care of if you're pre-approved by us)
• The amount of time both you and the seller have to make all these things happen (usually 30 to 60 days)

The seller usually has 24 to 48 hours to consider your offer or make a counter offer, which means, under the terms you offered, they want to sell you their house, but they want a change.

To close the deal on your house you will meet with a representative of the escrow/title company. Once the title is recorded, ownership will transfer to you.

FEES AT CLOSING

Buyer's Fees

Here is a list of fees you should typically expect to pay at closing; there may be more or fewer:

• Credit Report done by an independent credit association, to establish your credit rating
• Appraisal done by an independent appraiser, to establish the value of the house
• Inspection done by an independent home inspector, to provide information about the integrity of the house (typically not required by the lender)
• Title to disclose whether there are any liens and encumbrances
• Recording Fees to record the transfer of property with the appropriate government bodies
• Courier Fees to cover the cost of transporting documents between the escrow service and various other entities
• Loan Origination Fee this is a fee imposed by a lender to cover certain processing expenses in connection with making a real estate loan
• Discount Points prepaid finance charges tied to interest rate (the higher the interest rate, the lower the discount points.)
• Escrow Services

Seller's Fees

Here is a list of fees the seller should typically expect to pay:

• Escrow services (seller's portion)
• Title Insurance (based on purchase price)
• Excise tax
• Recording fee
• Real estate commissions

As part of your Purchase and Sale Agreement, you can ask the seller to pay your closing costs and prepaid items. Please be aware that lenders may have limitation on the amount of seller contributions typically 3% to 9%, depending on the loan to value.

Some things that may be required at closing, but not always:

• Water and sewer certification (if your new home is not on municipal and sewer facilities a certification may be ordered through your local health department to save you money)
• Building code compliance letter
• Mortgage insurance
• Survey

Escrow Accounts

Escrow accounts help insure that your are on track with taxes owed on the property and that homeowners insurance is maintained on the property. Escrow amounts are usually included in your monthly mortgage payment, depending on the type of loan. 

A down payment is a percentage of the home's purchase price that you pay upfront and represents your initial ownership stake in the home. The down payment for a first-time home buyer could potentially start at 3% of the total purchase price, but the amount you'll ultimately needs to pay is determined by the type of loan you select.

Utilizing different methods of savings can help you set aside a down payment faster regardless of the dollar amount.

• Automate saving by setting up automatic transfers from your checking account to savings.
• Save the extra money that comes your way, whether it's a raise, bonus, or tax refund.
• Stash your spare change in your savings account instead of your junk drawer.
• Certificates and Money Market accounts can offer higher interests rates than a regular savings account with terms to fit your down payment goals with predictable returns and low risk. Learn more about Certificate and Money Market accounts at Azura!
• Private Mortgage Insurance (PMI) can potentially allow for a lower down payment.
• Down payment assistance programs can help you save for a down payment. Look into local and state first-time home buyer programs. Ask an Azura Home Loans Consultant about available assistance programs. 
• Gift money from relatives or friends can help you with saving for a down payment. The money must be an outright gift - not a loan - and you'll have to document how you received the funds.

Many first-time buyers may need to use a combination of savings, along with other financial strategies. Not all of the strategies that people use will be right for you, so consider the pros and cons with professionals.

There is a chance that you're already worth more than you realize. When calculating your assets, be sure to include ALL of the following sources:

• All checking and savings accounts
• Stock, bonds, stock options, 401k value