As a first-time homebuyer, you might be unsure of which questions to ask or hesitant to ask them. Rest assured, there are no foolish questions in this process. A knowledgeable loan officer is there to walk you through every step.

Here are some common questions homebuyers should ask to make the process smoother, so you can get to the exciting parts like planning your future home.

Determining a budget is the initial step in the home-buying process. Consider your income, debts, and expenses to arrive at a realistic figure. Remember, qualifying for a larger loan doesn’t mean you should max out your budget.

Reducing your budget by a few thousand dollars can significantly affect your monthly payments and leave room for other homebuying expenses, such as inspections, insurance, warranties, and repairs or upgrades.

Monthly mortgage payments vary based on multiple factors: the home’s price, closing costs (which can sometimes be rolled into the mortgage), down payment size, interest rate (fixed or variable), and loan term.

Don’t forget additional costs like homeowners association (HOA) dues and private mortgage insurance (PMI) if your down payment is less than 20%. Tools like our mortgage calculator and advice from a Loan Advisor can provide accurate estimates of your monthly payments.

While a 20% down payment is often recommended, many loan programs offer lower options:

• Conventional loans: Down payments range from 5% to 20%, with some lenders offering as low as 3% for first-time buyers.
• FHA loans: The minimum down payment is 3.5%.
• VA loans: Often no down payment for eligible veterans and active-duty military personnel.
• USDA loans: Usually offer 0% down for rural homebuyers.

A higher down payment can lower your monthly payments and interest rate. Evaluate your financial situation and loan options to determine the best down payment for you. Loan officers can provide detailed guidance.

Down payment assistance programs and gift funds from family or friends can also help bridge the gap if you don’t have enough saved up yet.

Closing costs typically range from 2% to 5% of the home’s purchase price and include lender fees, home inspection, title, and escrow services.

Lender fees cover processing the loan and may include origination, application, processing, and underwriting fees. Not all fees apply to every loan, so your loan officer will clarify which ones are relevant. They will provide a full loan estimate at the application stage.

Home inspections, though optional, are advisable to uncover any hidden issues in the property. Government-related fees, such as recording fees and transfer taxes, vary by location. Third-party fees include title insurance, credit report, appraisal, and escrow fees.

Homeowners insurance must be in place before closing. Other expenses like property taxes and HOA fees are often prorated and paid upfront.

Your Loan Advisor will provide a detailed breakdown of closing costs and explain how they can be managed, including rolling them into your mortgage.

For a mortgage application, you’ll need financial documents like W-2s, pay stubs, bank statements, and tax returns.

Ideally, get pre-approved before house hunting because your financial situation may warrant additional documents. Specific requirements vary by loan program, and your Loan Advisor can give detailed guidance.

Interest rates significantly impact your monthly payments and overall home affordability. They change daily, so the rate at the start of your search might differ from when you apply for a loan.

Discuss with your Loan Advisor whether to lock in your rate or let it float. Programs like our SecureLock™ offer extended rate locks for added security.

Paying off your mortgage early can save substantial interest, but some loans have pre-payment penalties.

This is an important question to ask before choosing a loan. If avoiding pre-payment penalties is crucial for you, let your Loan Advisor know to find a suitable loan option.

Beyond mortgage-specific questions, consider other aspects of homebuying. A thorough home inspection can reveal issues with major systems like plumbing, electrical, and HVAC.

Remember, once the sale closes, any problems become your responsibility. You can negotiate which items the seller includes in the sale and request repairs or upgrades in your offer, but only the final agreed-upon items will be included.

Ask these additional questions:

• How long has the house been on the market?
• When were any major systems last repaired or replaced?
• What items are included in the sale?
• Has the homeowner had any recent problems with the house?

Your real estate agent can help find these answers. Homeowners insurance and a home warranty can provide extra peace of mind.

Starting the mortgage process is a big step for any first-time homebuyer. We’re here to support you throughout.

Contact us anytime for information, answers to your questions, or to begin the home loan process.