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A Mortgage Primer for Buying Your First Home

Your first home is an important milestone. These things don’t come with instruction booklets, however. When you are a first-time home buyer, you can feel a combination of overwhelm and confusion, especially when it comes to getting approved for a mortgage in Walnut Creek.

What is a Mortgage and Why is it Necessary?

Very few people buy a home with cash. In most cases, people simply don’t have that kind of cash in the bank. When you close on a home, you sign a note — a promise to repay the money you are borrowing for the home — and a mortgage — setting out the legal rights and terms of how the lender may take back the property in the event that you don’t repay that loan.

Shopping for a Mortgage

Shopping for a mortgage for your first home is important, particularly since there are so many variables not only in mortgage rates and terms but also considering your own financial history and capability to repay the loan. You should first get prequalified before even beginning your home search so you understand exactly what you can and can’t afford.

Working with a California mortgage broker is often a good place to start. These professionals offer knowledge and have many different types of resources. They can help you find the best lenders, rates and programs to fit your financial profile. They will crunch the numbers and make sure you aren’t wasting your time applying for loans you may not be approved for. They will also do much of the legwork involved in the mortgage approval process to ensure that things are done on a timely basis.

Your Appraisal

Once you have made an application with a lender, an appraisal will be done on the home you’re purchasing. This ensures the lender that the home is worth what you are paying and what they are accepting as collateral. A lender will have no interest in offering you a mortgage for a home that isn’t worth the purchase price and, consequently, the collateral value.

Mortgage Approval

Your lender will want to ensure that you can pay the monthly payment (principal and interest) to them each month. Based on the information on your application, your file will be reviewed by a mortgage underwriter who will research and verify the information you have given. You will be approved based on your

  • Income
  • Debt
  • Monthly expenses
  • Credit history
  • Market value of the home you’re purchasing
  • Ability to pay proposed principal and interest
  • Ability to pay escrowed items like insurance and taxes that will be collected each month by the lender
  • Ability to pay closing costs

Title Work

Another thing a lender will need to know is that the home and property are free and clear of legal title encumbrances. You will pay for title insurance that covers the lender in case of a future title issue coming to light that may affect their first mortgage lien. The title company will also require that a survey is completed to understand property lines, easements or any other encumbrances.

Finding financing for your first home can be stress-free when you are working with a professional California mortgage broker. At Bridgeport Funding, we offer professional mortgage broker services in Walnut Creek and surrounding communities in the Bay Area.

We will help locate the perfect financing for your individual financial profile and walk you through each step of the process. Call us for a prequalification consultation today at (925) 478-8630.

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