Homebuying Guide

House at dusk in rural New Jersey

As a first-time homebuyer, you may be feeling overwhelmed by the process. We’re here to help make things as easy as possible. Our guide will walk you through everything you need to know, from finding the right property to getting the keys in your hand. With our help, you can confidently take this big step with ease

Get Pre-Qualified

What is pre-qualification?

Pre-qualification for a home loan is the first step in the mortgage process. After you have been pre-qualified, you will know how much you can afford to spend on a home and what size loan you may qualify for. This is not a commitment to lend, but it will give you an idea of what size loan you may qualify for. You will still need to complete a mortgage application and go through the underwriting process to get final approval for your loan.

Pre-qualification is based on the information you provide about your income, assets, and liabilities. A licensed mortgage loan originator will review this information to establish the maximum purchase price you can afford and how much you may be able to borrow.

What are the benefits of pre-qualifying today?

Many people confuse pre-qualification with pre-approval. A pre-qualification is simply an estimate of how much you can afford based on the information you provide, while a pre-approval is a more comprehensive look at your financial situation that may include a credit check. Keep in mind that neither a pre-qualification nor a pre-approval guarantees that you will actually receive financing, as there are many factors that can affect your loan approval.

In order to get pre-qualified for a mortgage, you’ll need to provide your lender with some basic financial information. This includes information about your income, debts, and assets. Your lender will then use this information

Understanding Your Credit Report

The higher your credit score, the lower the interest rate you will be offered on a home loan. A good credit score can save you thousands of dollars in interest over the life of your mortgage.

If you’re looking to buy a home, having a good credit score is essential. A high credit score can save you thousands of dollars in interest over the life of your mortgage.

Here are three reasons why having a good credit score matters when you’re buying a home:

  1. You’ll get a lower interest rate on your mortgage.
  2. You’ll have a better chance of being approved for a mortgage.
  3. You’ll save money over the life of your mortgage.


If you’re thinking of buying a home, make sure you check your credit score and take steps to improve it if necessary. A little effort now can save you a lot of money down the road.

Check your credit score.

As a consumer, it’s important to check your credit score before meeting with a lender. By doing so, you can ensure that your score is accurate and improve your chances of loan approval. Additionally, checking your credit score can help you identify any potential red flags that may need to be addressed. You can get a free credit report once a year online by visiting annualcreditreport.com.

Verify your credit report for accuracy.

If you’re looking to get a loan approved, it’s important to first verify that the information in your credit report is accurate. Inaccuracies can delay your loan approval, so it’s important to dispute any errors with the credit bureau.

Pay down high credit balances.

-If you’re looking to improve your credit score, paying down high balances on lines of credit is one way to do so.

-This can also help you qualify for a better interest rate when you’re ready to apply for a loan.

-If you’re not sure where to start, focus on paying off the credit card with the highest interest rate first.

-Once that’s paid off, you can work on paying down the next highest balance, and so on.

-Paying down your balances will take time and discipline, but it’s worth it in the long run.

-Not only will you save money on interest, but you’ll also improve your credit score.

-And that can save you money in the long run, too.

Consider payment plans.

-If you’re struggling to make ends meet and your credit score is suffering as a result, it’s time to consider setting up payment plans with your creditors.

-Working out a budget-friendly payment plan shows lenders that you’re serious about being responsible for your debts, and can help improve your chances of being approved for a loan.

Meet Your Licensed Loan Originator

If you’re looking for a mortgage product that meets your needs, we can help. We’ll work with you to choose the right product and get you started. Here’s what you can expect:

– A licensed loan originator will assess your financial situation and make a recommendation

– A variety of loan products to choose from, tailored to your needs

– A straightforward, easy process from start to finish

Contact us today to get started. We’re here to help you every step of the way.

Estimate Your Expenses

-If you’re looking to buy a home, it’s important to factor in all of your estimated expenses. This includes your monthly bills, property taxes, home insurance, private mortgage insurance (PMI), living costs, and potential Home Owners Association fees.

-In addition to these ongoing costs, don’t forget to account for one-time costs during the buying process, like closing costs and your down payment.

-Our online calculators can help you get a general idea of how much home you can afford, as well as your estimated monthly mortgage payment.

-Determining all of these expenses upfront will help make the home buying process smoother and less stressful.

Get Pre-Approved

Getting pre-approved for a mortgage is a great first step in your home-buying journey. It’s important to understand the difference between pre-qualification and pre-approval. 

A Pre-qualification determines your ability to repay a loan based on the information you provide. Your liability, asset, and income information are reviewed by a licensed mortgage loan originator to establish the maximum purchase price you can afford and how much you may be able to borrow. 

A Pre-approval is when your information is reviewed and verified by an underwriter. This involves an analysis of your financial status and credit history. With a pre-approval, you’ll be able to negotiate your home purchase confidently. 

Realtors and sellers will often take your offer more seriously if you get pre-approved before house shopping because it lets them know you are ready to make a deal. A pre-approval may help streamline your process and result in a smoother transaction.

If you’re looking to get pre-approved for a mortgage, contact us today and we’ll be happy to help you through the process!

Find A Great Realtor To Work With

Once you’ve done that, it’s time to find a good realtor. This is someone who you can trust, who has a proven track record, and who has your best interests at heart. A good realtor will help you through the home buying process and make sure everything goes smoothly.

If you’re not sure where to start, ask for referrals from family and friends who’ve been through the process. They can recommend a good realtor to you.

Choose the Right Real Estate Agent

As a home buyer, it’s important to interview several real estate agents before choosing one. You’ll want to ask them a set of similar questions, such as:

– How long have you worked in real estate?

– Is this your full-time job?

– Have you sold homes in the area I am interested in before?

– How many sales in this area have you done?

– How many sales have you done in the last year?

– Will you be present for the closing of my loan?

Doing your research upfront will help ensure you end up working with an agent that’s a good fit for you and your needs.

Find Your Dream Home

As a potential homeowner, your dream home may be top of mind. It is important, however, to consider all aspects of the property before making an offer.

Your lender and realtor will be key partners in helping you find the right house. But it is ultimately up to you to decide what qualities are most important in a property.

Think about what you need in a home, and don’t get too caught up in the excitement of the search. With careful consideration, you will find the perfect place to call your own.

Find the right location

As a busy person, it’s important to choose a home that is in a convenient location. Consider the crime rate, public school ratings, your daily commute, traffic patterns, and local amenities when choosing a home. If public parks, libraries, pools, sporting arenas, churches, restaurants, or shopping centers are important to you, make sure you consider their proximity to your neighborhood before getting lost in visions of porch swings and curtains. By taking all of these factors into account, you can find the perfect home for your needs.

Consider a Home Inspection

When purchasing a home, it is important to be aware of the condition the property is in. Many times, homes that appear to be in good condition may have hidden problems that can be costly to repair.

It is important to have a professional inspector check the home before making an offer. An inspection can reveal hidden problems that may not be apparent to the naked eye. If there are repairs that need to be made, it is important to factor those costs into your offer.

Purchasing a home is a major investment, and you want to be sure that you are getting what you expect. A proper home inspection can give you peace of mind and help you make an informed decision.

Property Condition is Important

-If you’re considering buying a fixer-upper, there are a few things you need to keep in mind.

-Time, additional expenses, and stress are just a few of the things you’ll have to factor in.

-An FHA203(k) will allow you to finance qualified repairs, which can help offset some of the cost.

-Keep all of this in mind before making any final decisions.

Start The Loan Process

Wondering how to get started on the loan process for your new home?

Here is a quick guide on what you need to do next after finding your dream home.

After you have met with your licensed loan originator and gathered all the necessary paperwork, it’s time to submit your mortgage application.

Gather all necessary identification and paperwork

Identity & Income Information

As you begin the process of buying a home, there are a few key things you’ll need to have to make the process as smooth as possible. Gather the following items before getting started:

– Your full legal name, Social Security number, and date of birth. A copy of your Social Security card may be required.

– Your phone number, email address, and residential mailing addresses for the past two years.

– Your primary and secondary income and sources.

– Your government-issued photo ID.

– All employer names, addresses, and phone numbers for the past two years.

– The values of your bank, investment, and retirement accounts, as well as any other asset accounts.

– Your monthly debt obligations.

– The address of the property being purchased, year built, estimated down payment amount, and purchase price.

– Estimates of annual property taxes, homeowners insurance, and homeowner association dues (if any).

Income Information for Self-Employed Borrowers

As a self-employed borrower, it’s important to have all of your financial documentation in order before applying for a loan. This includes your personal and business federal tax returns for the past three years, a year-to-date profit and loss statement, and a complete list of all business debts. Having this information on hand will help the loan process go more smoothly and help you get the best possible interest rate on your loan.

Credit Information

-If you have derogatory credit items on your report, you’ll need to provide a letter of explanation to your lender.

-Source of funds documentation may be required for any large deposits made into your account.

-Any obligations due to legal action will require a judicial decree or court order.

-Bankruptcy/discharge papers will be necessary for all bankruptcies in your credit history.

-Lenders will also want to see payment histories for utilities, cable TV, internet, phone, auto insurance, and other expenses.

Income & Tax Documentation

Are you in the process of applying for a mortgage? If so, there are a few key pieces of documentation that you’ll need to have to move forward. These include:

– IRS Form 4506-T (request for tax transcript)

– Your W-2s from the past two years

– Pay stubs from the past 30 days

– Your federal tax returns (1040s) from the past two years

– Your most recent asset and bank statements from all accounts (2 months’ worth)

If you have any questions about what documentation you need or where to get it, your mortgage specialist will be able to help. In the meantime, gather up all of the required items and get ready to start the mortgage application process!

Submit your application

The next step is filling out a residential loan application (Form 1003), including the attached fair lending notice, loan info sheet, and credit authorization.

However, before you begin, keep in mind that mistakes should be crossed out and initialed–not whited out.

Review the Loan Estimate

As a potential borrower, it’s important to understand all the details of the loan you’re applying for. This document contains important information about the loan, including estimations of your interest rate, monthly payment, closing costs, taxes, insurance, and any prepayment penalties.

The lender must provide this to you within three business days of receiving your application. This way, you can be fully informed about the loan and make the best decision for your financial needs.

By understanding all the details of the loan upfront, you can avoid any unwanted surprises down the road. So be sure to ask for this document from your lender as soon as you start the loan application

Review the Good Faith Estimate

As a homebuyer, it’s important to be aware of the settlement charges you’ll need to pay at closing. This includes fees for services like title insurance and inspections, as well as taxes and other government-required charges.

The lender is required to provide you with a Good Faith Estimate of these charges within three business days of receiving your mortgage application.

Knowing what to expect ahead of time can help you budget for closing costs and avoid any surprises.

Work with Underwriting to clear up any issues or questions

For anyone who has applied for a loan, you are probably familiar with the underwriting process. Underwriting is the department that reviews all of your identification, paperwork, and credit history to assess if you will qualify for the desired loan. They determine the terms of the loan and will occasionally require extra documents to fully understand your background and make their decision.

It is important to make yourself available during the underwriting process and to respond to any requests promptly and thoroughly.

If you are in the process of applying for a loan, or are considering it in the future, understanding underwriting is crucial to a successful outcome.

Review the Closing Disclosure

If you’re taking out a loan, the lender is required to give you a three-day window to review the final terms of the loan. This is your chance to make sure everything lines up with what you were expecting, and to ask questions if anything is unclear.

Don’t let the opportunity to ensure a good deal pass you by – take a close look at that final loan document!

Make An Offer

As you prepare to make an offer on a home, there are a few things to keep in mind that will help you determine how much to offer. These include:

-The asking price

-Recent home sales

-Market conditions

-Re-sale value

-The Home Condition

-How many other prospective buyers are looking at this home

By taking all of these factors into consideration, you can make a smart offer on a home that will give you the best chance of being accepted.

Once the offer is accepted

Are you buying a home from a seller who will still be living on the property after the closing date? If so, there are some important things to keep in mind. Here’s what you need to know about negotiating rent payments with your seller:

– Clarify when the seller will be vacating the home.

– If the seller remains on the property after the closing date, you are entitled to negotiate rent payments.

– Be sure to get everything in writing so there is no confusion later on.

By understanding your rights and being prepared to negotiate, you can make the process of buying a home from a seller who will still be living on the property much smoother.

Get an Appraisal

As a potential home buyer, it’s important to understand the condition of the property you’re interested in. Home inspections can be helpful in this process, giving you a clear picture of the home’s condition and helping you negotiate a better price or contract terms.

Get all commitments in writing.

If you’re in the process of buying a home, it’s important to understand that verbal agreements may not be legally binding. This includes promises made by the seller, such as repairs or providing appliances. Be sure to get any agreed-upon terms in writing before signing any contracts. This will protect you in case the seller does not follow through on their promises. It’s also important to make sure that all loan details are included in writing before you sign anything. This will ensure that there are no surprises down the road. By being proactive and getting everything in writing, you can avoid any issues during your home-buying journey.

Set a Closing Date

As a homebuyer, it’s important to understand the closing process. This typically takes place in the presence of a public notary, so you should be prepared for what to expect. Here are some key points to keep in mind:

– Review the final documents to make sure everything is in order.

– Bring a cashier’s check to cover closing costs and the down payment.

– Be prepared to sign the loan agreement and show a photo ID and/or a Social Security card.

By understanding the closing process, you can help ensure that everything goes smoothly on your big day.

If you are currently in a lease

If you’re currently leasing an apartment, condo, or house, you may want to consider scheduling your closing date around the time your lease is up. Some homebuyers prefer not to have a payment overlap, while others enjoy the overlap if they have projects that need to be completed in the new home.

Knowing your options and what you’re most comfortable with can help make the home-buying process that much smoother.

Receive Your Keys and Move In!

Congratulations, you are now a homeowner! Option Financial is here to offer you guidance on any future questions or situations that may arise. A licensed loan officer will always be available to help you refinance, use your home equity, or even purchase additional properties.