You’re excited to search for your new home, but the financial considerations can be overwhelming, especially for first-time homebuyers. With these steps to financing a house as your guide, you can feel prepared and confident from house hunting to final closing.
And for those just beginning to consider homeownership, start with these financial do’s and don’ts so you can be ready when you decide to take the next step.
The first step in buying a home: Determine your budget. Ask yourself, how much home can I afford? Calculating your debt-to-income ratio is an important step to that end. Keep the percentage around 30% or less.
Pro Tip: Use our finance calculators to familiarize yourself with your finances, get acquainted with home financing terminology and begin exploring your purchasing power.
Pre-approval is also a great way to determine how much you can comfortably afford. You may choose to secure your own lender or work with MTH Mortgage*, the preferred Meritage Homes lender, who will assist you from this point until the day you close. You can get a head start on getting pre-approved by MTH Mortgage by filling out their online application. It will ask you basic questions about your current housing situation and finances.
The same should be the case if you work with another lender who will typically follow up with a complete credit history and profile, which will help you select the best loan option for you.
Once you are pre-approved and find your favorite Meritage home, the loan application process begins. You’ll be required to share some personal and financial information as well as having your credit report pulled and viewed. Thankfully, MTH Mortgage offers homeowners a simplified and streamlined path to financing a e home through digital mortgage applications available 24/7 and an established relationship with Meritage Homes. This way, someone will be with you every step of the way.
Applying for a loan with a co-borrower? Keep in mind they’ll typically have to share the same breadth and depth of personal and financial information as you. Don’t worry — if your loan officer is a pro, they will keep you informed and supported throughout the home financing process.
Here’s a sample of the information you’ll need to have on hand during the application process (view the full list):
• Residence history
• Employment history
• Bank accounts
Pro Tip: The more prepared and complete you can be with this information, the fewer follow-up questions will be required. That means a faster-moving loan process and a quicker path to ownership. Try not to lose sight of the exciting part of the process: your brand-new home.
After you apply, your loan will be assigned to a loan processor. Their job is to work with you to build a file with all the documents you’ll need to meet the requirements for final approval and closing.
These documents typically include:
Before you close, you’ll have the opportunity to lock in an interest rate. This will keep your interest rate from increasing over the course of your mortgage payment term.
Pro Tip: Keep in mind, interest rates are subject to change daily, so the rate you see today may be different than the rate you lock in closer to closing day.
Once the processor puts together your file, it’s given to the underwriter. The underwriter will review everything you’ve submitted, follow up on any missing documents and make a final decision on loan approval.
The decision is typically based on five factors:
1. Income
2. Assets
3. Financial obligations
4. Credit report
5. Property value
Closing is the final step in this process. At this point, all the documents that make your homeownership official are signed and processed, along with your paid closing funds.
To help your closing go as smoothly as possible, check these off your list:
Once all these steps are completed, you’ll be the official, proud owner of your new home and will be given your keys. Congratulations!
Once all these steps are completed, you’ll be the official, proud owner of your new home and will be given your keys. Congratulations!
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The foregoing information is provided solely for general information purposes and is not intended in any way as financial, securities, insurance, tax, or legal advice or services. Each potential homebuyer may have unique financial and other considerations that may be important to any home buying, financing or related decision. Accordingly, Meritage does not assume any duty or liability in providing the foregoing information and expressly disclaims all representations and warranties of any kind, either express or implied, with respect to such information. Potential homebuyers that desire additional information or guidance tailored to their specific situation should contact a relevant professional. Location information obtained from public sources and believed to be correct, but Meritage makes no representation or warranty with respect thereto.