The home buying process has many steps and having the right team is important to make sure everything goes smoothly. Your mortgage professional, the real estate agent, insurance agent and escrow company all play important roles. Get the right team on your side.
You want a professional team that you trust and it’s extremely important that each player communicate with each other on a regular basis so that everyone knows what is needed and is going on.
Mortgage Professional –
A mortgage professional (loan officer, mortgage planner, loan consultant, etc.) is the glue that holds the entire transaction together.
In addition to establishing the purchase price and monthly payment a borrower can qualify for, the mortgage team will also need to communicate with all of the other players on the home buying team throughout the entire process.
To highlight a few details your mortgage team is paying attention to:
- Initial pre-approval to determine purchase price / loan amount
- Explain all loan program options that may fit your investment goals
- Collecting / organizing loan approval documents
- Watching economic indicators that influence daily rate changes
- Locking rates
- Communicating with title / escrow officers
- Submitting loan package to underwriting departments
- Updating disclosure / GFE paperwork within proper time frames
- Following funding through the final recording
- Tracking inspections, insurance and other lending requirements
- After closing, rate & program monitoring to continue to take care of you!
Real Estate Agent –
A Realtor® is a licensed agent that belongs to the National Association of Realtors®, which means they are pledged to a strict Code of Ethics and Standards of Practice.
A few of the important roles your agent performs:
- Determine your home buying needs
- Define your property search criteria – neighborhoods, school districts, local amenities…
- Provide insight on market trends and property values
- Negotiate purchase contracts
- Pay attention to due-diligence periods and other important timelines
- Articulate inspection and appraisal reports
- Professionally estimate fair market value on listings
Home Inspector –
When you have found the home that you like, it is a wise idea to have a professional take a look at the home to see if there are any issues with the property that could be a problem in the future. A certified Home Inspector can be money well spent.
They will look at the functionality of the home to make sure the electrical, plumbing and physical aspects of the home are strong, which will help the buyer make an educated decision about following through with the purchase, or renegotiating certain aspects of the contract.
Keep in mind, the home inspector and appraiser have different jobs. An appraiser determines value, while the inspector looks for structural problems, defects or maintenance issues.
The inspector is doing this strictly for the buyer’s sake. The lender is not concerned if a faucet has a minor leak as long as the property is worth the sales price. Therefore, the lender generally does not require an inspection unless the purchase contract requires one.
The appraiser will conduct an analysis of the property to determine the current market value. The bank will always require an appraisal.
Appraisers compare the sales prices of similar properties sold in the neighborhood and surrounding areas with the subject property.
This can be a tricky process, especially if there are few properties to choose from, or if there is an overwhelming amount of foreclosures and short sale listings.
Now, since two homes are rarely identical, the appraiser has the job of trying to compare apples to apples; sometimes red delicious to yellow delicious, or sometimes Fuji to Winesap.
When done, the estimate of value is given. If that value is below the purchase price, then negotiation may take place. If it is at or above the purchase price, we are ready to go forward.
Insurance Agent –
The lender in any mortgage transaction will require a homeowner’s insurance policy (hazard insurance).
This policy protects the property in the case of fire, theft or other damage (except flood or earthquake, those are separate policies and may be optional).
Title and Escrow –
It is possible to have a title company and an escrow officer work for different companies.
In most purchase transactions, the seller has the option of choosing the title company.
The title and escrow officers are often thought of as the same role, but in reality are quite different positions.
The title officer takes care of all issues that have to do with the title (also referred to as the deed) of the property.
Escrow takes care of receiving, signing, and notarizing the final loan documentation, as well as collecting the other paperwork associated with the home sale.
The escrow officer is a neutral third party that makes sure no money is transferred until all conditions for each side are met.
The money management of an escrow company include:
- Real estate commissions
- Funds to mortgage company
- Homeowner’s Insurance Premiums
- Property Taxes
- HOA Dues and other third-party fees
Finally, the escrow officer will see that you are properly recorded with the county as the new owner!