The Home Buying Process
Home Buying Steps & Process:
Step 1 – Getting Pre-Approved Prior to Shopping for a Home
It’s obviously important to know how much home you can afford, what type of down payment to budget for, monthly mortgage payment as well as what type of loan program you’ll be using to finance the new property.
Certain mortgage loans have residence type, HOA, appraisal or insurance restrictions that your agent needs to be aware of prior to showing you listings.
The very first step is to find out what you can qualify for, not shopping for a home and then hoping you can qualify!
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.
Step 3 – Submitting the Purchase Offer
You’ve been pre-approved, you have found your dream home! Now what? Your real estate agent will submit your offer on the home to the listing agent.
Once your offer is accepted, then the clock starts on a number of different things from a home inspection, mortgage approval, appraisal, etc..
Step 4 – Conditions and Paperwork
It comes in from all angles at this point, lenders, processors, insurance agents, sellers, real estate agents…. and the list can go on. Updated Income/Asset Documentation- You may have supplied your lender with a mountain of documentation, but make sure you continue to save all of your new pay stubs and financial statements as you move through the process. Chances are your lender will want updated documents as you get closer to closing. Funds for Closing– Lenders will want to source where every dollar for the transaction is coming from and verify that it has been deposited into your bank account. If funds need to be liquidated from a retirement account or home equity line start the process sooner rather than later. Sometimes lenders will not release all of the funds immediately after a large deposit so it is important to have these in place well ahead of your closing date. The same applies for Gift Funds-make sure the donor is aware of your time frame and is willing to supply the required documentation to your lender.
Step 5 – Closing
Woohoo, you have the final lender approval. All of the I’s have been dotted and T’s crossed and the loan documents are sent to the escrow company for your signature and then funding of the loan!
Related Home Buying Process Articles:
Renting vs Buying
Buying a home versus renting is a big decision that takes careful consideration.
While there are several biased sources that can make arguments for or against owning a home, we’ve found that most home buyers base their ultimate decision on emotion.
Cost, Qualifying, Freedom, Maintenance and Security are some of the main reasons for renting, as well as owning.
…….(read more about Renting vs Buying)
While many experienced real estate agents have a general understanding of the mortgage approval process, there are a few important details that frequently get overlooked which may cause a purchase to be delayed or denied.
New regulation, updated disclosures, appraisal guidelines, mortgage rate pricing premiums, credit score, secondary approval layering, rescission deadlines, property type, HOA insurance requirements, title and property flip rules are just a few of the daily changes that can have a serious impact on a borrower’s home loan financing.
Factors To Consider When Purchasing A Foreclosure or Short Sale
Short sales, foreclosures and new construction homes all have issues that need to be considered when pursuing financing.
If the guidelines and potential pitfalls are not properly considered and understood, you could face delays in closing or potentially even a denied loan.
First-Time Home Buyer Credit Checklist
Getting a new mortgage for a First-Time Home Buyer can be a little overwhelming with all of the important details, guidelines and potential speed bumps.
Since there are so many rules and steps to follow, we’ve put together a simple list of Do’s and Don’ts to keep in mind throughout the mortgage approval and closing process.
Frequently Asked Questions:
Q: What Is The Difference Between A “Buyer’s” and “Seller’s” Market?
Everyone wants to “buy low and sell high,” but the truth of the matter is there is no way that can happen for everyone, every time.
Seller’s Market = More buyers than sellers.
Buyers Market = More sellers than buyers.
Q: Where Does My Earnest Money Go?
The escrow company holds onto it and it is credited back towards the buyer’s closing costs and/or down payment.
Q: A Home Inspection?
A home inspection is different than an appraisal. Most people get a home inspection done right after there purchase offer is accepted. The home inspector takes a look at all of the major components and structure of a home such as furnace, plumbing, electrical, roof, etc… and will issue a report discussing any issues. After this is done, the buyer has the option to continue on with the purchase or if there is a great deal of problems that they don’t want to deal with, call off the purchase.
Q: Does it matter if I buy a home that is part of a Home Owner’s Association?
A Home Owner Association may have the power to determine the color of your home, the number of pets you have and the type of grass you have to plant. They also may have the power to levy assessments, dues and fines.
Or, they may be as simple as collecting a few dollars per year to make sure the grass is cut in the common areas.