Buying a home is probably the biggest purchase you will ever make, and for a first-time homebuyer the process can be overwhelming and stressful.
Our Zions Bank mortgage officers have valuable insights to share based on years of experience helping people achieve their goal of buying their first home.
Here are our bankers’ top 6 tips to help you navigate the first-time home buying process with confidence and greater ease.
Tip #1: Don’t disqualify yourself
Many prospective buyers make the mistake of assuming they won’t qualify for financing so they don’t bother trying. Before you count yourself out, talk to a home loan professional.
“It’s best to set up an appointment to meet with a mortgage professional and ask them if you qualify for financing,” says Anthony J. Graham, Zions Private Mortgage Banker in St. George, Utah. “They will typically review your credit, discuss your income sources and history, talk about sources of funds for a down payment, and your monthly mortgage payment budget.”
Graham explains that many times he’s met with clients who were convinced they wouldn’t qualify for financing and walked out of his office with conditional approval letters in hand.
Tip #2: Don’t give up
If you’ve met with your mortgage banker and you don’t qualify for financing right now, don’t give up.
“Don’t get frustrated and quit the process,” Graham advises. “Simply ask what you need to do to help you qualify in the future.” In many cases, it’s a matter of paying down debt, spending a few more months in a new job, or saving a bit more for your down payment.
The key is to find out what steps you need to take to qualify for a home in the near future. “Time passes quickly, stay on course, and soon you will be moving into your new home,” Graham says.
Tip #3: Get your paperwork in order
A key aspect of the home loan process is a review of your finances. When you apply for a mortgage, you will need to provide income, asset, and credit documentation.
Begin the process of organizing your financial information now by gathering your most recent tax returns, pay stubs and bank statements. Type up your address and job history with dates.
“Having all of this prepared in a folder and ready to review with your mortgage banker will make things go so much more smoothly,” Graham explains.
Tip #4: Prepare financially
“Prior to applying for a home loan, make sure you’ve done all you can to be in the best financial shape possible,” says Joshua Reese, Zions Bank mortgage officer in Boise.
He recommends taking steps to pay down credit card balances, address any collections and make sure you are paying bills on time. In addition, 30 days prior to applying for a mortgage and during your loan approval process, avoid applying for credit or taking on any new liabilities, such as an auto loan.
He adds that first-time homebuyer programs offered by government agencies may not require perfect credit, but a better credit score can help lower your monthly mortgage insurance payment and increase your eligibility for down payment or closing cost assistance.
Tip #5: Educate yourself
A home purchase is a big deal, and the mortgage is just the beginning. From HOA (Home Owners Association) dues to CC&R’s (Covenants, Conditions & Restrictions) — there's a lot to learn when buying your first home.
“It can be overwhelming if you’re not aware of the commitment you are making,” Reese says. He notes that many housing counseling agencies offer first-time homebuyer classes and resources aimed at educating new buyers about homeownership, including the Idaho Housing and Finance Association, the Community Development Corporation of Utah and the Wyoming Community Development Authority.
Tip #6: Know Your Options
As a first-time homebuyer, it’s important to understand your loan and down payment options. If you don’t have the 20 percent typically required for a conventional mortgage, talk to your mortgage banker about alternatives that may be available.
“There are several first-time home buyer loan programs that reduce or eliminate your down payment, or offer down payment assistance,” says Ross Farr, Zions Bank mortgage officer in Idaho Falls. It’s also possible for first-time homebuyers to get help with their home loan from a family member who is willing to cosign or provide gifted funds for a down payment.
Farr notes that each of these programs has requirements to qualify, but that many first-time homebuyers aren’t aware of the resources available to assist them on their path to homeownership, such as loans that offer down-payment assistance, and even loans that offer closing cost assistance. There’s even a program where the lender pays the monthly mortgage insurance that is normally incurred with down payments less than 20%.
Want to learn more about your first-time home buying options? Visit the Zions Bank Home Loan Center to answer your mortgage questions and discover additional mortgage resources. Zions Bank offers programs to help first-time homebuyers conquer affordability challenges, including low down payment requirements, competitive interest rates and down payment assistance to those who qualify. Contact a Zions Bank mortgage loan officer to learn more.