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First-Time Home Buyer's Guide


Education, tips, and tools to prepare you for one of life's biggest decisions.




Your Home-Buying Journey
Starts Here

Unlocking the door to your first home is one of life’s great milestones. As you begin your house hunt and research what you need to do, it’s easy to feel overwhelmed with the amount of information that is out there. But you don’t need to be!

This First-Time Home Buyer’s Guide will help you navigate through the stages of your home-buying journey with less stress and more confidence. Pre-qualification is a good place to start your journey. Our guide will also navigate you through the process of shopping for your first home, getting your first mortgage, and what to expect on the very special day when you close on your new home.

If you’ve already started your journey, feel free to jump to the step you’re on. Or start at the beginning and let us help make this process smooth and the results rewarding.
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Step 1 of Home-Buying: Mortgage Pre-Qualification

What is a pre-qualification and why do I need it?

A pre-qualification is an offer to lend based on a borrower’s application and lender underwriting guidelines. A pre-qualification letter can be used by buyers to show home sellers that their offer on a home can be taken seriously. This is particularly valuable for first-time home buyers who have no track record of homeownership. Many real estate agents, especially in competitive markets, require buyers to have their pre-qualification paperwork complete before taking them shopping.

Pre-qualification and pre-approval are not the same. The pre-qualified amount isn’t yet a sure thing because it’s based solely on the borrower’s application, without verification by the lender. Please note that a Pre-Qualification will require us to run a credit check for income verification and security purposes.

 

What documents will I need in order to apply for a pre-qualification?

To get pre-qualified for a mortgage, a prospective first-time home buyer will be required to submit a standard loan application. the information that is covered in a standard application includes:
  • Income amounts from all sources.
  • Basic data about the borrower or borrowers, including date of birth, marital status, contact information and identification information, such as a social security number.
  • Information on assets and liabilities. Assets include checking, savings, investment and retirement accounts plus physical assets such as a home, boat, cars, etc. Liabilities are all outstanding debts.
  • Any other pertinent financial information, such as bankruptcies, judgements, etc.

At this stage, borrowers won’t need to provide property information. That will be added later. They also don’t need to provide all the documentation that will be required at a later stage.

Ready to get started on your first step towards the first home of your own? Start the pre-qualification process online or contact our mortgage experts.

 

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Step 2 of Home-Buying: Shopping for Your First Home

Finding a Home Though it sounds relatively simple, a lot of work and consideration goes into finding your first home. You'll need to think about what you need, want and can afford in a home - all of which take time and planning.

Before you start, though, it's important that you develop the right mindset. Since this is your first time buying, it's unlikely that you'll stumble upon a "perfect" home. Sometimes, the idea of perfection in real estate is risky, because it could cause you to overlook a home with great potential. That potential is what finding a home is all about, especially when you're embarking on homeownership for the first time.

You may decide to add to and improve this property in the years you live there, or use the money from selling it to find an even better home later on. Either way, this choice is an investment in your future. Keep your dreams in mind, but don't let them hold you back from discovering a great home.

 

Establishing a Budget

No one should start a house hunt without knowing how much they can realistically and comfortably spend. Skipping the step of setting a budget leads to wasted time and the disappointment of unrealistic expectations, especially when it’s a prospective buyer’s first shopping experience. A lender’s pre-qualification gives shoppers an estimate of the limits of their borrowing ability, but there are other factors involved. Buyers also need to think about how much of their income they want to apply to non-housing purposes, like savings or other major purchases. Using a home affordability calculator can make setting a budget easier.

For some hopeful buyers, the numbers may not align with what they want in a home. If they have their hearts set on something they cannot yet afford, the best next step may be to rent a bit longer and save more money for their down payment.

Making the Big Decision

Home buyers have a lot of things to consider when deciding if a home is right for them or not. Once the price is right, size, location and lifestyle are the most important considerations.
  • Size: It’s important for buyers to decide how much space they need, including the desired number of bedrooms and bathrooms as well as overall square footage.
  • Location: When a family includes children, finding the best school district might be the priority. Choosing the right location can also involve considering factors such as noise levels, traffic patterns, crime statistics, nearby amenities, and even community spirit.
  • Lifestyle: The right space is the space that fits a family’s lifestyle best. For example, spectacular views mean nothing if no one is home long enough to enjoy them, and a minimalist kitchen may be beautiful but completely dysfunctional for a large family.

First-time home buying can be a very emotional journey. It’s also important for shoppers to be aware of common red flags, such as:
  • A beautiful neighborhood with a high crime rate
  • Abandoned properties in the vicinity
  • Large tracts of undeveloped land nearby
  • Signs of potentially major damage in the home

Any of these can mean trouble in the future, from unexpected expenses or loss of home value to the aggravations of a large construction site within earshot.


Terri's Tips

Everyone has different "must-haves" or needs for their homes. Here are some important things to consider as you begin your home search.

The Best Time To Buy A Home
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Step 3 of Home-Buying: Getting a Mortgage

Choosing the right mortgage lender is one of the most crucial steps in the home buying journey. While a competitive rate is very important, a lender's reputation for service, its communication throughout the process, and assistance in resolving any issues is what makes the difference between smooth sailing and choppy waters.

Delivering the best service is Bethpage's defining characteristic. Processing loan requests quickly is our main priority. Our specialists are here to work with first-time home buyers one-on-one throughout the entire process.

Best Options for First Time Home Buyers

The three main options in home loans used by first-time buyers are adjustable-rate mortgages, fixed-rate mortgages, and FHA loans.

For a fixed-rate mortgage, the interest rate remains constant throughout the life of the loan. While the initial rate may be higher than that for an adjustable-rate mortgage, the stability is appealing to many buyers.

Adjustable-rate mortgages or ARMs have a period of fixed interest, after which the interest rate and payment adjust at specific intervals. ARMs may be a good choice for first-time homeowners because the interest rate and monthly payments are likely to start off lower than for a fixed-rate mortgage of the same amount. Although they often increase after the initial fixed-interest period, this may work out well for young buyers whose income is rising as well.

One of the most popular mortgage loans for first-time buyers is the FHA loan, insured by the Federal Housing Administration, a division of HUD (the Department of Housing and Urban Development). FHA loans require lower minimum down payments and credit scores than many conventional loans, although borrowers must pay for FHA mortgage insurance. These loans have fixed interest rates and terms of 15 or 30 years. For 2020, FHA mortgages can be used to fund amounts up to $331,760 in most areas of the country.

The Mortgage Lending Process

The typical mortgage process goes through a number of steps. There’s no doubt that it is complicated, but it doesn’t have to be overwhelming with guidance from our Bethpage mortgage experts. It’s also hard to predict how long it will take to get a mortgage approval. It depends on whether everything goes smoothly or if some challenges or just questions pop up along the way. It’s best to take it one step at a time.
The Steps of Getting a Mortgage
Submit A Loan Application
Submit A Loan Application

When you find a lender that offers you the competitive rates and service you need, you will need to start the process with a detailed mortgage application. Once completed, your lender will be in touch with you to begin the next steps.

Order An Appraisal
Order An Appraisal

Appraisals are ordered on every loan. This helps ensure the home you are purchasing is assessed fairly based on other comparable properties sold in the neighborhood you are interested in.

Underwriting Review
Underwriting Review

Your loan will be reviewed by an underwriter who will evaluate your application and the property to ensure they all meet the requirements for the type of financing you are requesting.

Loan Processing
Loan Processing

Verifications of credit, employment, and assets are completed.

Final Approval
Final Approval

Where all the details of the loan are reviewed as a whole.

Clear to Close
Clear to Close

A notification is sent to you and a closing date is scheduled by your attorney. You will have an opportunity to review the loan and confirm that everything is as expected.

Closing
Closing

All parties sign closing documents with settlement agents and attorneys.

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Documents Needed for First-time Buyer Mortgage Application

For first-time home buyers who have already started an application to get pre-qualified, much of the work is done. (See list above.) Only documentation and information on the property being purchased will need to be added now. Necessary documentation may include:
  • Past and current W2s, paystubs, income tax returns, profit and loss statements for the self-employed, alimony and child support records.
  • Bank statements
  • Investment and retirement account statements
  • Gift letter, if using gift funds
  • Documentation for unique large deposits to any accounts
  • Proof of rent payments
  • Divorce decree
  • Bankruptcy or foreclosure records
  • Proof of citizenry, green card or visa
  • Purchase contract for the new home

How Much Will My Mortgage Payments Be?

Understanding exactly what goes into monthly mortgage payments is essential to calculating how much they will cost. Monthly payments include the interest and principal payments on the mortgage loan plus additional funds the lender puts into escrow to pay property taxes and insurance. The easiest way for first-time home buyers to find out how much they will be paying each month is to use our Bethpage mortgage calculator. This calculator factors in the amount and length of the loan, the interest rate, plus property taxes and insurance to determine the full monthly payment amount.

When you reach the mortgage application stage of the home buying process, you can apply for a Bethpage mortgage conveniently online or contact our experts for more help in starting the process.

Step 4 of Home-Buying: Closing on a House

After a mortgage has been approved, the final step of buying a home is closing. This is when all parties sign the necessary documents and ownership of the property is transferred to the home buyer. Some of the most important documents to be signed at closing are the deed, affidavit of title, transfer tax declaration, promissory note and mortgage, closing disclosure, proof of homeowners’ insurance, and title insurance.

Understanding Closing Costs

Average closing costs for home buyers can be around 2-5% of their loan amount. Several kinds of fees and payments can be part of these costs. They may include, but are not limited to:

  • Lender's fees — including discount points, document review, processing and underwriting fees
  • Attorney fees, if applicable
  • Home inspection
  • Survey
  • Appraisal
  • Title search
  • Lender’s title insurance
  • Recording fees
  • Escrow deposits for property taxes and homeowners’ insurance premiums

 



What will my closing costs be?
Closing on your home

Buy Your First House with a Bethpage Federal Credit Union Mortgage


When you’re ready to purchase your first home, Bethpage is ready to help you through the process. We have professionals to guide and advise you on all the choices you’ll need to make from your type of loan to its repayment time frame. Plus, we’ll keep you informed throughout the loan process so you feel comfortable every step of the way.

Bethpage Federal Credit Union operates more than 60 branches and shared service centers on Long Island. So when you’re ready to take the next step, stop by the branch nearest you, contact one of our mortgage experts, or apply online for a mortgage that will help you attain your goal of home ownership.

Simply click the button below to receive a call from one of our specialists.

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