Mortgage 101: A First-Time Homebuyer’s Guide

Posted by Doug Winquist on Dec 12, 2015 06:00:00 AM

Topic: ALL

Couple meeting with mortgage lender

So you have decided it is time to buy a home, but you’re unsure what steps you need to take to accomplish that. Buying a home is exciting, but it can also be a little scary and overwhelming. To prepare you for the home buying process, we’ve broken it down for you into four simple steps, or Mortgage 101.

Step #1: Meet with your mortgage loan officer.

The first step in the home buying process should be to meet with a mortgage loan officer. A loan officer will be able to help determine how much house you can afford and what mortgage programs are available to purchase your new home. Knowing this information in advance of meeting with a realtor will give you confidence that you are looking at homes you can afford, while your realtor will be assured that you will be able to obtain financing when you are ready to make an offer on a home. You can find a Bank Mutual loan officer near you to help you get started.

Step #2: Get organized. 

The key to getting a loan approved in a timely manner is to make sure you promptly provide all the documentation requested by your loan officer. This includes complete bank statements, tax returns, pay stubs, and any explanations needed to clarify items on the application or corresponding documentation.  Once the credit, income, asset, and liability documentation has been reviewed, a preapproval letter can be issued (subject to finding a property and a satisfactory appraisal of the property). A pre-approval letter will reassure your realtor and sellers that you will be able to obtain the financing needed to purchase the home.

Step #3: Make an offer.

When you find the home you are ready to purchase, your realtor will help draft an Offer to Purchase. The offer will include the purchase price, closing date, contingencies for financing, appraisal, home inspection, and any other terms that have been negotiated. 

Once the offer has been accepted, a complete copy of the signed offer needs to be provided to your lender along with any updated documentation, if requested. You will be provided with disclosures detailing the costs and terms of the proposed loan and will be asked to pay an application

Next, an appraisal of the property will be ordered by the lender.  Once the appraisal has been received, the file will be reviewed by an underwriter, who will approve the loan and issue a loan commitment letter. This letter will also reflect any conditions that need to be satisfied prior to the loan closing.  A copy of the letter will need to be provided to your realtor to satisfy your financing contingency.

Step #4: Close on your mortgage.

Prior to closing you will need to obtain homeowners insurance, with the first year premium paid in full, a copy of the policy or binder, and a paid receipt to provide to your lender. Once these items are completed, a closing date will be scheduled. At closing, you will sign the loan papers, provide the remaining balance of your down payment and closing costs, and receive the keys to your new home.

Learn more about our exclusive first time homebuyer mortgage programs.