Skip to main content
Home / Fraud Center

Beloit First Time Homebuyers Guide

Before you start the homebuying process and rush off to view properties for sale, you need to start by assessing your financial situation to get a better idea of what you can afford to buy.
 

realtor showing home to young couple

Buying your first home is an exciting time in life, but it can also be an overwhelming process. There’s plenty to do before, during, and after buying a home. But at First National Bank and Trust, we’re here to guide you through the process of buying your first home.

Are You Financially Ready to Buy a Home?

Before you start the homebuying process and rush off to view properties for sale, you need to begin by assessing your financial situation to get a better idea of what you can afford to buy.

Is Your Credit Score Good Enough?

You’ll need a reasonable credit score to qualify for any type of home loan or mortgage. A conventional mortgage typically requires a credit score of 620 or higher. If you’re considering an FHA loan, you’ll need a credit score of 580 or higher.

If your credit score is below what you need for a conventional mortgage or FHA loan, you should look at ways to improve your credit score before considering applying for a mortgage.

Do You Have Enough Saved For a Down Payment?

Alongside having a good credit score, you’ll also need to put some cash down when you purchase your new home. For a conventional mortgage, it’s best to have a 20% down payment—this means you’ll need to hand over 20% of the total sale price in cash, with your mortgage making up the rest. If you cannot put down 20%, you may quality with as low as 3% down payment.  Any down payment less than 20% will required to purchase private mortgage insurance (PMI).

FHA loans for a first time homebuyer could be another option, letting you put down as little as 3.5%, as long as you also have a credit score that meets the requirements. Rural development loans for a first time homebuyer may allow you to buy with no down payment at all, but you’ll still be required to purchase PMI if this is the case.

You can get additional downpayment assistance through first time homebuyer programs like First National Bank and Trust’s Downpayment Plus program. To be eligible for this program, you must contribute at least $1,000 to your home purchase and complete pre-purchase education and counseling.

If you’re still struggling to come up with a downpayment, this is a good time to adjust your budget and start saving for your future home. Put aside some additional money each month that will lead to an amount that you’re happy with putting down for your new house.

How Much Can You Afford?

Aside from your downpayment, there are a number of additional costs that you need to factor into your house purchase. Closing costs can be rolled into your mortgage, but you should also budget for moving expenses, furniture, and ongoing maintenance or renovation costs once you move into your home.

Homeownership expenses will include costs like your mortgage, homeowners’ insurance, utilities each month or quarter, taxes, and possibly an HOA fee if you move into a particular development.

When budgeting for your new home, keep in mind that your housing expenses should not be more than 30% of your income. You’ll want to factor this into your ongoing expenses when determining what kinds of homes are within your budget.

Understand the Beloit Housing Market

Before you start looking at houses, it’s a good idea to review the overall home prices in the Beloit area to help you figure out how much you can afford to spend. This will also give you a better picture of the neighborhoods you can afford, as housing prices can vary.

 Beloit First Time Homebuyers Guide: 1. Determine If you're Financially Ready To Buy A Home A: Is your credit score good enough? B. Do you have money for a down payment? 2. Determine How Much You Can Afford. 3. Understand The Beloit Housing Market. 4. Investigate First Time Homebuyer Opportunities. 5. Get Prequalified For A Mortgage. 6. Learn About Your Home Loan Options. 7. Find Your Dream Home. 8. Apply For a Mortgage in Beloit WI.

Investigate First Time Homebuyer Opportunities

Before you make a decision about which first time homebuyer mortgage to get, be sure to look at all the options available to you. Whether it’s a conventional mortgage, an FHA loan, or even a rural development loan, there are plenty of choices to research and look through. 

First National Bank and Trust is always here to help, especially if you’re considering downpayment assistance or a non-conventional mortgage,

Get Prequalified For A Home Loan

Consider getting prequalified for a mortgage before you start working with a realtor and looking at homes. This means that the lender you’re considering using can get a rough estimate of what you’re qualified for based on your current financial situation.

Not only is this good for the lender, but it’s also good for you! With prequalification, you’ll given a fixed amount of what you will likely be approved for, so you know you’re not looking at homes above your budget. This also helps show sellers that you’re serious about making a purchase, so once you find the home for you, you can make an offer quickly.

Know Your Mortgage Options

Do your research on the different types of mortgages you could consider. Conventional loans are available as either a fixed rate mortgage, where the interest you pay will be the same for the lifetime of the loan, or a variable or adjustable rate mortgage where the interest may be lower at first but can fluctuate with market conditions.

FHA loans are supported by the Federal Housing Association (FHA) and help mortgage lenders have greater protections and guarantees should a homeowner default on their home loan. Rural development loans are supported by the USDA and help home buyers in eligible towns and rural areas to purchase property.

Find a Home in Beloit and Apply for a Mortgage

Once you’ve been prequalified for a loan, you can start looking at homes with your realtor. When you’ve found a home, you can submit your offer and fill out your official mortgage application once that offer’s been accepted.

Your mortgage approval, even with prequalification, is contingent on several factors, including:
  • Your financial situation (credit/liabilities, income, assets etc.)
  • Purchasing homeowners’ insurance at closing
  • The home’s appraisal
  • The results of a home inspection
  • A clean home title—this means there are no liens like mortgages already existing on the house that won’t be completed upon the sale.

What Do You Need to Apply for a Mortgage?

When you’re ready to move into the official application process, you’ll need the following documents:
  •  A completed mortgage loan application with FNBT
  • Credit report
  • At least 30 days of pay stubs
  • Your W2 forms from the previous two years
  • Asset statements for the previous two months

If you’re self-employed, you’ll also need to provide two years of profit and loss statements and your last 2 tax returns.
 

First Time Homebuyer Don’ts

Before you go through with your home purchase, remember a few important don’ts:
  • Don’t change jobs until your home is purchased unless you’re moving due to a job relocation and have an offer letter in hand.
  • Don’t increase your credit card debt.
  • Don’t cosign on any loans for anyone else.
  • Don’t deplete your savings.
  • Don’t buy a home that you feel is outside your price range.
  • Don’t make a rushed decision to buy a home.  

Apply for a Mortgage in Beloit WI

When you’re ready to buy a home in Beloit WI, work with a local community lender like First National Bank and Trust. We’ll treat you like family and, if you’re from outside the area, we’ll welcome you into our community by helping you find the right mortgage for your situation. 

Contact us or visit one of our convenient locations in Beloit, Argyle, Janesville, Clinton, Darien, Delavan, Elkhorn, Monroe, Walworth, and Williams Bay Wisconsin, and Rockton, Roscoe, and Winnebago, Illinois.