Home-Buying Checklist | Simplify the Process
Buying a home can be a complex process. It's easy to feel overwhelmed, especially if you are a first-time homebuyer.
This checklist breaks it down into simple steps with an action plan to help you purchase a home. It gives tips to build your credit history and decide your down payment. It also explains closing costs and the documentation mortgage lenders often need.
Step 1: Build your credit history before you apply for a mortgage.
Your credit history is a tool lenders use to determine your loan amount and interest rate. In general, a lower credit score can result in a higher interest rate. A cleaner credit history can give you a better credit score, which can mean better loan terms.
Your credit score is based on:
- The amount of credit you have available.
- How much of your available credit you use (generally, using less of your available credit is better).
- Your payment history.
- How often you apply for credit.
You can build your credit score by:
Establishing a positive credit history. How you handle your credit card balances, auto loans and personal loans contribute to your credit history. You can demonstrate your reliability by managing your debt load and credit card balances responsibly.
Paying your bills on time. According to myFICO, your payment history can contribute up to 35 percent of your credit score, so work to pay on time each month.
Avoiding hard credit pulls in the months before you plan to apply. When you apply for certain loan types, like an auto loan, credit card or personal loan, the lender pulls your credit report. This pull can temporarily drop your score a few points. The score usually bounces back after a few months, but according to credit reporting agency Experian, the credit check can stay on your credit report for 24 months.
Step 2: Save for your down payment.
A down payment is the portion of your home’s purchase price that you pay upfront in cash. While some loan programs may require as little as 3 to 5 percent down, most first-time homebuyers usually put down around 10 percent according to the National Association of Realtors.
Beyond the minimum down payment amount, how much you save for a down payment is up to you and your financial situation. Some reasons for a larger downpayment may be:
- Lowering your monthly mortgage payment.
- Lowering the overall cost of the mortgage loan.
- Building more equity in the home right away.
- Avoiding Private Mortgage Insurance (PMI).
Some reasons for a lower down payment may be:
- Having more cash on hand in case of unexpected repairs or emergencies.
- Buying a home sooner.
- Having funds for renovations.
Our mortgage specialists can walk you through your options and answer your questions about down payments.
Try our Down Payment Calculator to estimate how changes to your down payment can impact your mortgage.
Step 3: Save for closing costs.
Closing costs are separate from your down payment and are usually due when you close your loan. They often include:
- Loan origination fees.
- Title search and insurance fees.
- Prepaid expenses such as homeowners insurance or property taxes.
- Appraisal fees.
You can estimate your closing costs with our calculator.
Step 4: Gather the documents you need to apply for a mortgage.
Your lender will review your income, job history, assets, debts, and identity as part of the mortgage application. The documents you need depend on the type of loan, the source of your income, and your financial situation. It helps to gather these items before you apply.
Income and employment documents: Gather your recent pay stubs, W-2s, federal tax returns, and employment history. This helps lenders verify that your income is steady and likely to continue. If you earn bonuses, commissions, military benefits, retirement income, investment income, or other income, your lender may ask for additional records.
Bank and asset statements: Be ready to provide recent statements for checking, savings, investment, and retirement accounts. These documents help lenders confirm where your down payment, closing costs, and cash reserves are coming from. If part of your down payment is a gift, you may need a gift letter and documentation showing the transfer of funds.
Identification and personal information: Most lenders will ask for a government-issued photo ID, Social Security number, current address, and recent address history. If your legal name has changed, you may also need supporting documentation.
Debt and credit information: Your lender will review your credit report and may ask for details about student loans, auto loans, credit cards, child support, alimony, or other monthly obligations. Your lender also may ask for information if you had recent credit issues or major changes in your finances.
Self-employed or variable-income documents: If you are self-employed, own a business, or earn income that changes from month to month, you may need additional documents such as two years of tax returns, 1099s, profit-and-loss statements, business bank statements, or other records that show income stability.
Property and purchase documents: Once you have a signed purchase agreement, your lender may request a copy, along with information about homeowners insurance, property taxes, homeowners association dues, or other details related to the home.
Because every borrower’s situation is different, your mortgage loan officer can give you a personalized checklist before you apply. Having documents ready can help reduce delays and make the application process smoother.
Step 5: Compare mortgage rates and loan options.
Get a personalized quote to compare interest rates, loan terms, monthly payments, and estimated closing costs. This can help you see how each loan option may affect your budget now and over the life of the loan.
You will also want to consider the service, convenience and support you’ll receive along the way. Your loan officer should be easy to reach and quick to answer your questions. The bank should have solid online tools to manage your loan. Convenient branch locations are a plus for the times you need to speak with a banker.
Talk with a mortgage loan specialist about your options.
We're happy to answer your questions about the loan application process.
- Contact a mortgage loan officer online
- Call 316.383.8570 or 855.383.4434 to speak with our team.
Learn more about Emprise Bank mortgages and apply online in less than 10 minutes.