Financing Your First Home

We want to thank Anthony Gallup, Senior Loan Officer for Nexa Mortgage, for joining Onyx in September to share insights about the financial aspects of purchasing a home. As a seasoned mortgage lender, Anthony’s session was filled with information and insights that will be invaluable for anyone who needs to obtain financing to purchase a home. 

In case you missed it, don’t worry-we’ve got you covered! You can watch the recap video below. We’ve also included key takeaways for the three main stages: Preparation, Pre-approval, and Closing.

Part 1: The Preparation Stage

The first step on your journey to homeownership is the preparation stage. This phase involves several critical actions:

1. Start Saving ASAP: Covering the down payment and closing costs is often the most significant barrier. While there are programs to help aspiring homeowners, those mortgages usually come with higher rates–not to mention program rules that often limit what you can do with the property. The goal is to bring as much to the table as possible, so start the penny-pinching now!

2. See a Mortgage Professional: Talking to a mortgage professional before you’ve cleaned up your credit report might sound counterintuitive, but it’s the next best step. Mortgage professionals have insider knowledge that can help you identify issues in your credit report that will most likely impact your application. 

3. Determine affordability: Don’t let the bank set your budget! We’ve all heard stories about people being ‘house poor’ because the price they paid wasn’t financially sustainable in the long run. Ideally, your mortgage will translate into a monthly payment that leaves enough cushion to maintain your current lifestyle comfortably.

Part 2: Pre-Approval and Home Shopping

Once you’ve addressed issues on your credit report and determined your maximum monthly payment, it’s time to explore the different types of lenders and loan options available and to gather documents for mortgage pre-approval. 

1. Compare Interest Rates: Offers vary from place to place, so comparing interest rates from multiple lenders is essential to finding the best deal.

2. Choose Your Loan Type: Decide which type of loan is most suitable for you: VA, FHA, or Conventional. Remember: each loan type has different requirements and guidelines, so always ask your loan originator which is best for you! 

3. Gather the necessary documents: To get pre-approved, you must provide documentation of your income, debt, and assets. Keep the following information on hand to ensure a smooth application process: 30 days of paystubs, tax returns or W2 forms for the last 1-2 years, and bank statements. Self-employed individuals may also need business tax returns and P&L statements.

Part 3: After the Offer is Accepted

Before the property can formally change hands, the lender has to evaluate your financial documentation and determine the home’s fair market value.

1. Mortgage Underwriting: This is the longest part of the mortgage process. During this time, the lender must assess your income, the property you’re buying, and your assets and credit history (IPAC). They also need to verify the property is okay to lend on (i.e., no liens or other outstanding issues).

2. Home Inspection and Market Appraisal: An appraiser will do an in-person inspection of the home to determine the fair market value, which helps the lender decide the maximum amount they’ll give you. If the valuation aligns with the offer you extended, everything’s great; otherwise, you may need to renegotiate with the seller or cover the difference yourself. 

3. Closing Process: As you near the finish line, it’s crucial to understand the closing costs, which may include the down payment, lender fees, attorney fees, and escrow deposits (to prepay Homeowners Insurance, Property Taxes, and other charges).

That’s it for our key takeaways from the masterclass on financing home purchases. As usual, the session covered way more info than we could include in the recap, so check out the video replay below to learn about rate buy-downs, home appraisals, and more.

Finally, if you’re navigating the path to home ownership and have questions or need guidance, feel free to connect with Anthony or others in the Onyx family. Those home ownership dreams are within reach, and we are here to help you achieve them!

Anthony Gallup

Senior Loan Officer
Self Scheduling Calendly Link


Previous Sessions

Tax Strategy 101

Thanks to everyone who joined our first Onyx Wednesday session–and a special shout out to Kevin Ozenne for all the

Read More »