From Dream to Doorstep: A Beginner’s Guide to Home Buying

Buying your dream home is like treasure hunting and standing on the X that marks the spot. The journey to get there might feel overwhelming, but with our EdiFi Expert-approved home buying guide, it doesn’t have to be! 

Alongside our mortgage partners, Member First Mortgage, we’re ready to help you find your treasure. Let’s get started!

Prepping for Home Ownership

Before you hop on Zillow and start browsing, it’s important to figure out what you want and what you can afford. Use your budget to get a concrete number, and go from there. Keep in mind: mortgage lenders will use your gross income— your income before taxes —to calculate your mortgage payment. 

Don’t have a budget? Check out our budgeting series to get started! 

While you have your budget in front of you, remember, you’ll be juggling other expenses as a homeowner. Including: Lawn care, additional utilities, and pool maintenance. Try to anticipate how these costs will affect your budget. 

Once you know what you can afford, it’s time to browse! Using Zillow or other house-buying apps, ask yourself these questions:

• What type of home do I want?
  
  • (Condo, single family, townhouse, etc.)
• Where do I want to live?
  
  • (In downtown, near good schools, close to work, etc.)

These details will help your loan officer review your options and determine what you qualify for and what you do not. 

Qualifying for a Home Loan

Preparation is key! The good news is that everyone, regardless of lender or mortgage type, is looking for the same thing. 

Step 1: Gather your documentation. You’ll need the following:

• Last 2 years of W-2s
  
  • Lenders look for 24 months of uninterrupted employment. If there are employment gaps, they will ask for an explanation. 
• Last 2 months’ deposit statements 
• Identification (ID, Passport, etc.)
• Last 30 days of pay stubs 
• If self-employed or using commission income: Tax returns from the last 2 years

Step 2: Review your credit report. It’s a good idea to go in knowing your credit score and if anything on your report will give a lender pause. Check your credit report for free three times every 12 months at annualcreditreport.com.

Step 3: Get prequalified with EdiFi! Alongside our partner, Member First Mortgage, EdiFi helps you get prequalified with a quick, easy online application. Plus, your prequalification lasts for 90 days!

Step 4: Select a realtor. Your realtor will represent you in negotiations with the seller— they know the laws, the market, and will help make your home-buying experience a breeze!

Avoiding Mortgage Pitfalls

It’s hard to imagine that one small transaction or change can mess up your chance at a good mortgage, but it’s better to know what to watch out for than to accidentally fall into a bad situation.

Credit & New Debit

Do not, and we can’t stress this enough, apply for new credit cards, new debit cards, or raise your current line balances while closing on your house. This includes any “Buy Now, Pay Later” offerings like Klarna, Afterpay, or Sezzle. Do not finance any vehicles or make large purchases. Avoid cash advances, as these are considered debt. 

Why is this important? Lenders verify all your debt before closing on your house; any new debt may affect your ability to qualify for your loan. Plus, your credit score partially determines mortgage rates— any changes to it can drastically affect your approval. 

Employment Changes

Discuss any possible employment changes with your loan officer before you make the change. Pay structure changes— reflected by your 1099/W2, salary, and commission —can jeopardize your approval. Remember, you’re required to present all updated paystubs within 30 days of closing; without them, you may not be able to close. 

Large Deposits

Do not deposit cash worth more than 50% of your verified gross monthly income. Lenders must verify all sources of funds being used to buy your house, so please keep copies of checks, expense vouchers, and sale documents. 

Gifts

Talk to your loan officer about any gift funds to ensure they’re appropriately documented and are from an acceptable source. All gift funds must be from a family member, and all donors must sign a gift letter. Some may be required to show bank statements. Remember, cash gifts are not acceptable. 

Home buying is more of a marathon than a sprint, but with EdiFi and our partners at Member First Mortgage behind you, the finish line is a lot closer than you think!!

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