First time home buyers are in the dark on many basic areas of the home buying transaction. To keep from making mistakes and possibly losing money, get to know the glossary of terms used. It is imperative to understand the five areas of the buying process.

There was a time when 100 or more different programs existed and everyone could fit into a home loan. Not anymore. The FHA is the most popular since you only need 3.5% down and it can be gifted by a family member. Generally 10-20% down is best, if possible. A 20% down payment saves you from paying monthly mortgage insurance.

Pre-qualification is the first step to getting ready to make an offer. Three financial areas are considered in this important evaluation. The income, assets, and your credit will be evaluated for affordability and credit behavior. This process also has to do with determining how much house you can buy based on monthly payment. This may include taxes, insurance and possibly the monthly mortgage insurance. Ideally you want to stay around 25% of your income as a payment. You can still qualify between 26-50% or more, however be careful to respect your overall household budget. Credit scores of 700 or higher will allow for the best rates. Assets will be verified to at least cover necessary down and closing costs. Two or more months of payments may be required in assets as reserves.

A detail of the cost of doing the home loan is the good faith estimate. The GFE outlines the loan amount, interest rate, monthly payment, loan product, lender fees, title/escrow fees, and prepaid tax and insurance amounts. When you sit down with a lender, ask for the GFE before you leave. This disclosure is crucial to monitor your home loan costs and overall scenario until your loan closes.

Your trusted local real estate agent and home loan professional will help guide navigate you through the process. You are now pre-qualified for a purchase price and can start looking for a home with features and location in mind. In the process of negotiation, it is normal to ask the seller to pay 3-6% of the closing costs. Check with your loan professional to be sure your loan product allows this. After making an offer, you will likely get accepted! This is the good news you want to get started. Now the ordering of the home inspection, appraisal, formal loan approval and satisfying underwriter conditions begin. Expect to be asked for more information, possible delays, and roadblocks as part of the process to completing your purchase.

Once conditions are met in underwriting, it is time to order your loan documents. Loan documents consist of the note, the deed of trust, and all disclosures required by law. After signing your documents in title or with a mobile notary, it typically takes 24-48 hrs to fund the loan. After funding and recording with the county, the home loan process is complete and the house is yours to move into!

Good communication and experienced professionals go a long way to making the home buying experience a great one. Be selective in who you choose to handle one of the biggest financial transactions in your life. Cathy Acosta of Mission Hills Mortgage Bankers says, I love working with First Time Home Buyers. As a teacher, I like to take the extra time to explain and answer all their questions. I can empathize with their fears and concerns about the many options available. Take time to choose your realtor and mortgage professional. Also be willing to learn about the process and take control of what you can control.

Before you commit to any lender, you owe it to yourself to check with a seasoned loan professional to be sure you are treated fairly. Prequalification is the first step. Visit Home Loans Redding for current loan programs and resources to make your transaction a success. Quickly apply online for a home loan or call for current rates. Its FREE with No Obligation to analyze your loan scenario.

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