Everything you need to know to buy your first home in Omaha Nebraska
Buying and financing a home is an involved process with lots of moving parts. It can also be tough to figure out exactly where to start buying your first home. This is a complete guide to preparing to buy your first home, get ready for financing, and properly shop for a home.
When buying your first home it is important to have a team of professionals available to help you every step of the way. We are a local mortgage lender serving Omaha, Papillion, La Vista, Bellevue, and all of eastern Nebraska. We can sit down and walk you through the process.
Contact us for a free consultation
If you have made it this far I assume you are already flipping through houses on Zillow or some other home shopping site. But now what do you do? How do you know if you qualify? Or what the new payment would be? I am going to give you some things you can do before you contact a lender or a realtor as well as some tips on how to first contact local real estate professionals.
- Steps you can take before contacting a realtor or lender
- What to do when you are ready to contact a real estate professional
- How to protect your loan approval while you shop for a home
Steps you can take BEFORE contacting a realtor or lender
- Get an idea of your credit history and score
- Get your income and asset documentation together
- Calculate a ballpark house payment
Get an idea of your credit history and score
For a home loan approval, we will use a full tri-merge credit report (a hard pull on all three bureaus) and take the middle score to qualify. We can do this for free once you complete a full application, but there are steps you can take to learn about your credit before application.
Annual credit report
By law you are allowed one free credit report from all three bureaus every year. If you have not used this service in the last 12 months, go to annualcreditreport.com and submit a request. This report will detail what is reporting on your credit, but it will not give you scores. It is still a good place to start so you know what is hurting you and what debts you have active.
Credit Karma
You can also go to credit karma or other free credit reporting sites. These sites will give you a score “impression” that will give you a rough idea of score. It is important to emphasize that these sites DO NOT give you an accurate credit score. They are taking the data from your report making an educated guess about your score. They can sometimes be accurate and sometimes they are way off. I always tell people these sites are good for monitoring changes in your credit, but the score should not be trusted. Still it is another good, and free, place to start.
Lender soft pull
At this point you will have to talk with us and complete an application. But we can still check your credit without doing a full tri-merge hard pull. I can pull the complete credit report for one of the three bureaus without affecting your credit. This will give us one score and one bureaus credit history. Most creditors report to all three bureaus so it should be fairly accurate, but it cannot be used for a full loan pre-approval.
Full tri-merge credit report
If you want to start shopping and making offers on homes, you will need a full tri-merge credit report. Most agents will not show you a house until they know you are a qualified buyer. Once you are ready to take this step we can help.
Get your income and asset documentation together
First, let me say that I love buyers that have all their documentation together in the beginning. It makes the whole process so much easier. If you do one thing before calling a realtor or lender it is this right here.
Income documentation
If you are a W2ed employee it is pretty simple. We will need all W2s for the last two years and two pay stubs. If you had multiple jobs in the last two years get all W2s and get the start and end dates for those jobs.
If you are receiving overtime, bonus, or commission, ask your employer for the last two years pay for all of these items. We will use a two year average of overtime, bonus, and commission for your monthly income. If you have not received these for two years it is likely we will not be able to use them. Make sure to tell your loan officer if these have been received for two years so they can find if they can be used.
If you are self-employed, we will need all personal and business returns for the last two years. We will need all schedules. Because self-employment can be very unique for each buyer, it is best to give your loan officer all tax return information as soon as possible so they can calculate income.
Asset documentation
For assets we will collect two months of bank statements or retirement account statements. It is important that they are actual bank statements, not online transaction summaries. Most people do not receive statements anymore, but all websites will have a section to pull up a .pdf of your actual statement. We will need these.
We will be looking for large non-payroll deposits on your statements. If you have non-payroll deposits larger than 50% of your monthly pay we will need to document and explain them.
These are the big ones, but we will also need a copy of your driver’s license, child support or alimony info if any, and the amount you currently pay for rent.
Calculate a ballpark of your house payment
We have a simple payment calculator HERE. This is going to give you a very rough idea of payment. Remember that your payment will also include taxes and insurance and Mortgage Insurance if needed. Taxes and insurance will depend on the house you find, but for now just take 50% of the mortgage payment and use that as your rough monthly tax and insurance amount.
If you are putting down less than 20% on a conventional loan or going with FHA financing, there will be Mortgage Insurance. This will need to be calculated by a loan officer to get the exact amount. For a rough estimate (very rough estimate) use .75% of the loan amount and divide it by 12. Add that to your monthly payment.
What to do when you are ready to contact a real estate professional
Once you collected your documentation and done your due diligence on your credit it is time to contact your real estate team. There is definitely a right way to go about this.
- Do you contact the lender or realtor first
- How to get pre-approved for financing
- Should you meet the realtor before looking at houses
Do you contact the lender or realtor first?
There is a way this should be done and the way most people do it. Most people look at houses online and then reach out to a realtor when they are ready to view a home. I get it. For everything else we have financed (cars, target cards, etc) we first find the item we want to buy and then line up the financing. Buying a house is very different.
Pre-approval first
Many of my clients come from realtors. Most buyers reach out to the realtor to see a house and most realtors will ask “Are you qualified for financing?” They will want to make sure they have a buyer that qualifies before taking them on home tours around town. The realtor sends them to me to see if they can purchase a home.
If you want to be ready to jump on a house when you see it online, you need to have that pre-approval letter in hand when you call a real estate agent.
How to get pre-approved for financing
If you followed the steps at the beginning of this article, you are way ahead of 90% of home buyers. Having a good idea of your credit history and all of your documents ready means a quick pre-approval process. The next step is to talk to a local mortgage lender. Find one with a good reputation. This is important not only for the quality pre-approval, but it will show agents in town that you are working with a respected real estate professional.
After talking with a local lender, they will have you complete a full online application and submit all of your documents either by upload or by email.
Contact us and we can send you that application link
Once your application and documentation is reviewed I can issue a pre-approval letter and get your some estimates on a few loan programs. We can also submit your documents for a pre-underwrite so that you have a pre-underwrite letter instead of a pre-approval letter. This will show sellers that you are a super solid buyer and put you ahead of most other potential buyer offers.
Should you meet the realtor before looking at houses
Every realtor is different and has a different way of working. In my opinion, the good realtors do a consultation before ever taking you out to a house.
A consultation is a meeting at the realtor’s office (or coffee shop) to discuss exactly what it is you are looking for in a home. Are schools important? Do you plan on living there for 10+ years or is there a possibility you will upgrade in the near future? Are you willing to look at houses that need a little love or do you need a move in ready house?
Most buyers just want to get out there and start looking, but a consultation will streamline the shopping process and give your realtor the information they need to provide you amazing service.
How to protect your loan approval while you shop for a home
Okay, you found your lender and your realtor. Your pre-approval letter is in hand and your realtor knows exactly what you are looking for in a home. The home shopping process can take a day or take six months. What can you do to make sure you maintain your approval?
- Be mindful of your credit, assets, and income
- Keep your lender and realtor in the loop
- Update your pre-approval every 60 days
Be mindful of your credit, assets, and income
The most heartbreaking experience is a buyer that gets pre-qualified for financing, but 90 days later does something that throws their approval out.
Make sure you are not taking out new debt or running your credit. Debt-to-income ratios and credit score changes can move you from an approved buyer to a disqualified buyer. I have seen it happen.
Don’t change jobs!! If you change positions or pay structure at your job let you lender know.
Be mindful of your assets. Did you get a big check from your parents for Christmas? Or sell a car to you buddy? Contact your lender and ask them how best to document these new funds. Funds that cannot be properly documented cannot be used for home financing.
Keep your lender and realtor in the loop
This sort of goes along with being mindful of your income, assets, and credit. I know some times things change. Job opportunities pop up. Assets come in. And credit has to change. These can usually be worked out with the lender. They often only become an issue because we were not kept in the loop. Once your loan goes into underwriting basically a full audit of your income, assets, and credit are done right up to the day of close. If something changed it will be discovered and if that is a week or a few days before closing it can cause problems.
Update your pre-approval every 60 days
I am often asked how long a pre-approval last. There is no exact expiration date of a pre-approval, but your credit report is only good for 90 days. So why update your approval every 60 days?
Though the credit report last 90 days, that is 90 days from the day we pulled it to the close date. If your credit report is 60 days old and you have not found a house, chances are it will expire before a close date (closings average 30 days). Just for good measure, while you are actively shopping we should review your income, assets, and credit every 60 days.
So now what?
Buying your first home is a huge milestone. We want to make sure it is an amazing experience and not a stressful one. Follow the steps above, but also know that you can reach out to us at an stage in the home buying process. If you are not buying for a year and just have a few questions, we are hear to answer those with no obligation. We are consultants first and salespeople a very distant second.
