7 Steps to Financing Your New Home

A guide to help you from house hunting to final closing

7 Steps to Financing Your New Home

You’re excited to search for your new home, but the financial considerations can be overwhelming, especially for first-time homebuyers. With these steps as your guide, you can feel prepared and confident from house hunting to final closing.

And for those just beginning to consider homeownership, start with these financial do’s and don’ts so you can be ready when you decide to take the next step.

7 Steps to Financing Your New Home

  • 1. Set a budget based on your finances.

    The first step in buying a home: Determine your budget. Ask yourself, how much home can I afford? Calculating your debt-to-income ratio is an important step to that end. Keep the percentage around 30% or less.

    Pro Tip: Use our finance calculators to familiarize yourself with your finances, get acquainted with home financing terminology and begin exploring your purchasing power.

  • 2. Make your budget official with pre-approval.

    Pre-approval is also a great way to determine how much you can comfortably afford. You may choose to secure your own lender or work with MTH Mortgage, the preferred Meritage Homes lender, who will assist you from this point until the day you close. You can get a head start on getting pre-approved by MTH Mortgage by filling out their online application*. It will ask you basic questions about your current housing situation and finances.

    The same should be the case if you work with another lender who will typically follow up with a complete credit history and profile, which will help you select the best loan option for you.

  • 3. Apply for the loan that works for you.

    Once you are pre-approved and find your favorite Meritage home, the loan application process begins. You’ll be required to share some personal and financial information as well as having your credit report pulled and viewed. Thankfully, MTH Mortgage offers homeowners a simplified and streamlined path to financing the home of their dreams through digital mortgage applications available 24/7 and an established relationship with Meritage Homes. This way, someone will be with you every step of the way.

    Applying for a loan with a co-borrower? Keep in mind they’ll typically have to share the same breadth and depth of personal and financial information as you. Don’t worry — if your loan officer is a pro, they will keep you informed and supported throughout the process.

    Here’s a sample of the information you’ll need to have on hand during the application process (view the full list):

    • Residence history
    • Employment history
    • Bank accounts

    Pro Tip: The more prepared and complete you can be with this information, the fewer follow-up questions will be required. That means a faster-moving loan process and a quicker path to ownership. Try not to lose sight of the exciting part of the process: your brand-new home.

  • 4. Work with your loan processor.

    After you apply, your loan will be assigned to a loan processor. Their job is to work with you to build a file with all the documents you’ll need to meet the requirements for final approval and closing.

    These documents typically include:

    • Verification: All information about your income, assets and liabilities included in the initial loan application will be confirmed by verbal and/or written verifications.
    • Appraisal: Your mortgage company will arrange for a licensed real estate appraiser to substantiate the value of your property.
    • Homeowner’s insurance: Thirty days before your closing date, choose an insurance carrier. If you’re buying a Meritage home, the Meritage Homes Insurance Agency* works closely with MTH Mortgage to ensure the process goes smoothly. At least 10 days before closing, you’ll be asked to provide evidence of your home insurance; this must occur prior to closing.
  • 5. Lock in an interest rate.

    Before you close, you’ll have the opportunity to lock in an interest rate. This will keep your interest rate from increasing over the course of your mortgage payment term.

    Pro Tip: Keep in mind, interest rates are subject to change daily, so the rate you see today may be different than the rate you lock in closer to closing day.

  • 6. Submit everything for final approval.

    Once the processor puts together your file, it’s given to the underwriter. The underwriter will review everything you’ve submitted, follow up on any missing documents and make a final decision on loan approval.

    The decision is typically based on five factors:

    1. Income

    2. Assets

    3. Financial obligations

    4. Credit report

    5. Property value

  • 7. Sign the final documents, close like a pro and get your keys.

    Closing is the final step in this process. At this point, all the documents that make your homeownership official are signed and processed, along with your paid closing funds.

    To help your closing go as smoothly as possible, check these off your list:

    • Invite every borrower to the closing: Each person listed as a borrower or co-borrower needs to sign the closing documents. If a signer can’t make it to the closing appointment, whether virtual or in-person, make arrangements beforehand with your mortgage company and the escrow company.
    • Have your photo ID handy: You’ll need one of the following on closing day: a U.S. government photo ID, driver’s license or passport.
    • Set up a transfer of funds: Your escrow or settlement agent will give you the dollar amount necessary for closing and tell you who the payee should be. Most escrow companies only accept wire transfers. Work with your escrow company to prepare the closing funds.

     

    Once all these steps are completed, you’ll be the official, proud owner of your new home and will be given your keys. Congratulations!

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