You’ve heard there’s no place like home, but at Pyatt Builders, we believe there’s no place like your first home. You make your biggest (and most exciting) purchase, switch from renting to owning, and most importantly, take a giant step toward the rest of your life. It turns out your first home really is the most special place in the world!
At Pyatt Builders, we want you to feel as confident about buying a new home as possible, which is particularly important when it comes to the mortgage process. As one of the very first steps in your journey, obtaining a mortgage may seem overwhelming (and we don’t blame you!), so we’ve listed out all of the steps involved to help you feel as prepared as you need to be. Take a look at what the mortgage process will look like for you:
Mortgages for First-Time Home Buyers
Step 1: Check your credit report and score.
First thing’s first: check your credit score! Scores range from approximately 300 to 850 — generally, the higher your score, the better the loan you’ll qualify for. If there are any errors in your report, make sure to dispute them. And if your score is low, don’t worry. There are several things you can do to improve it! Of course, if you need any help, we’re here to guide you along the way.
Step 2: Figure out how much you can afford.
There are several online mortgage calculators that will help you determine how much house you can afford. And to make this even easier for you, we also offer mortgage calculators on our homes and quick-move-in homes right on our website!
On top of your mortgage payment, don’t forget to factor in money you’ll need for a down payment, closing costs, fees, and the costs of moving and buying new furniture. If you need help with anything, we work with some of the city’s best mortgage professionals who would be happy to provide the assistance you need.
Step 3: Find the right lender.
When it comes to your lender, getting recommendations is your best bet (it’s always a good idea to talk to several different lenders as well). When you do, ask a lot of questions… and make sure you’re satisfied with the answers! The most important thing is to find a lender who makes you feel comfortable and at ease. You can always ask your Pyatt Builders sales associate for a list of preferred lenders.
Step 4: Get your documentation in order.
Be prepared to provide your chosen lender with:
- 30 days of your most recent pay stubs
- Two months of your most recent bank statements for all accounts (all pages)
- Two years of W-2s and 1099s
- Two years of tax returns (including all schedules)
- Recent copies of any stock brokerage or IRA/401k accounts (all pages)
- Driver’s license and social security card
- If you are self-employed: your year-to-date profit and loss statement
- If applicable: copy of divorce decree and/or child support court orders
Step 5: Choose the best mortgage for your situation.
Your lender will be able to advise you on the type of loan that best fits your needs. A few of the most popular loans for first-time buyers include:
Adjustable rate mortgages (ARMs) are short-term mortgages that offer an initial fixed interest rate for a short period of time, usually between one to seven years. After that, the interest rate can adjust every year up or down, depending on the market. These mortgages are good for people who don’t plan on living in their home very long and/or are looking for a lower interest rate and payment.
Fixed-rate mortgages are more traditional and offer a fixed interest rate and a fixed monthly payment for a longer period of time, usually 15 or 30 years (although they’re available in 20 or 25 year terms). These mortgages are good for people who want a predictable payment and plan on living in their home for a long time.
Both fixed and adjustable rate mortgages can have an interest-only payment period during the loan term when you’re allowed to pay only enough to cover the interest portion of your mortgage payment. You can still pay principal when you wish, but you don’t have to if your budget is tight.
Step 6: Get approved for a mortgage.
After signing a purchase agreement for your new Pyatt Builders home, your preferred lender will pull together the information needed to process your loan, including a completed application with loan disclosures and the documentation you’ve provided. Your loan officer will pass your complete application to an underwriter, who will check your eligibility for the mortgage based on your existing and expected new mortgage debt, your income, employment history, and credit history. During this time, your lender may ask for additional documentation.
Step 7: Look at homes in your price range.
Yes, even the mortgage process has a fun part! Make a list of what you want and need, including number of bedrooms and bathrooms, outdoor space, neighborhood amenities, proximity to your workplace, convenience to shopping and dining, etc. After you’ve put together a clear-cut picture of the kind of home that fits your lifestyle, browsing our gorgeous new Pyatt homes throughout Indianapolis will be that much more enjoyable.
Step 8: Close on your home.
The closing process, also known as “settlement” or “escrow,” brings together the parties who are part of the real estate transaction. Be sure you talk to your mortgage lender to understand all the costs that will be involved with the closing so there are no surprises.
Closing costs may include a down payment, title fees, appraisal fees, attorney fees, inspection fees, and points you may have bought to buy down your interest rate. At closing, you will sign all of the paperwork required to complete the purchase, including your loan documents. Once the paperwork is returned to the lender, and the check is delivered to the seller, you’re ready to move into your new home in Indiana!
Stay tuned for the next part in our blog series about tips for buying your first home!