Purchasing a home can seem to be a tumultuous time in any person’s typical schedule. There’s time and juggling of schedules for viewing properties, inspections, signing contracts, completing loan documentation and fulfilling requests for personal financial information for loan approval. Purchasing a home, no matter whether it’s your 1st purchase or your 10th purchase, should be relatively easy, fun and stress free with today’s technologies and with the correct professionals in your corner. This miniature guide will prepare you to enter the marketplace and alleviate avoidable headaches.
Pre-qualification, The 1st Step to Owning a Home:
Pre-qualification isn’t as daunting as it seems. This process entails gathering information with a loan officer with the intent to find out what you can afford/qualify to purchase. What grant programs or special financing programs are available to you and which financing program makes most sense for your potential “plan” for the property. For example, a primary residence that you’ll convert to an investment property one day.
Pre-qualification can be completed via telephone and typically takes 20-30 minutes or can be completed online on your lender’s website. In the initial phone call or online, a loan officer will ask you for items like your full legal name, date of birth, Social Security Number, pull a copy of your credit report, employment history etc.
The most important part of being pre-qualified is allowing your lender to review your financials. Financials requested can include but are not limited to tax returns, W-2’s/10-99’s, student loan documentation, pay stubs, offer letters for employment contracts, driver’s license, and bank statements. Without financials, you leave the door open for potential headaches once you’re under contract on the home you’ve fell in love with.
At the end of your pre-qualification, your loan officer will let you know an approximate price range where you should be looking for potential homes.
Finding your Home of Choice:
Now knowing what approximate price range you qualify for, you can enter the marketplace with confidence and clarity with your Realtor to identify homes that meet your needs and wants. Your Realtor will arrange tours of homes that meet your search criteria.
When you’ve found your dream home, your loan officer will provide you with a “Loan Estimate”. The estimate(s) outline, monthly payment, down payment, and costs associated with the purchasing that home. If you are satisfied with the terms and move forward, your next step is to write an offer and your loan officer can provide a pre-approval letter that reinforces to the seller that you’ve done your due diligence to prepare for the purchase.
Writing an Offer:
This step of the process has a multitude of items that can be negotiated i.e. sales price, closing date, closing cost help provided by the seller, inspections to name a few. Your Realtor will represent you in the negotiation and work with the seller’s Realtor to ultimately reach mutual, acceptable terms for both parties.
Now that your offer is accepted by the seller, you’re able to perform the inspections that were negotiated for within the contract by licensed professionals. At the same time, your lender will start to process your contract, have you sign loan disclosures, order an appraisal of the home and work towards getting your loan approved by the specified date in your contract. Your loan officer or lender’s processing staff may request additional financial information from you like updated pay stubs or bank statements.
“Clear to Close”:
The three best words for most real estate professionals. Clear to close means that your loan is fully approved and all conditions have been satisfied. At this time, your lender will work on final figures for cash/funds needed to complete the purchase. The lender will provide you with a “Closing Disclosure” will final figures at least 3 days prior to settlement. The funds needed for settlement must be certified funds in the form of a wire or cashier’s check and given to the title company who is completing your settlement on the property.
What to Expect at Settlement:
Settlement day has finally come and you’re ready to move into your new home. On settlement day, you’ll want to bring your certified funds or they may be there already if you wired the funds. In addition, you’ll want to bring a photo ID. During settlement, you’ll be signing final loan documents, most of them you’ve already seen. Once signed, these documents are returned to the lender or filed with the county courthouse i.e. the deed showing you now own the property.
Once you and the seller complete the signing of the documents, you’ve officially purchased your home!
This list may still seem daunting, but working with the right professionals will take a lot of the angst away that goes along with that first big purchase!
Author: Daniel Tinnin began his mortgage banking career in 2013. Daniel’s priority as a loan officer is to provide top notch service to his clients by guiding them through the most important financial decision of their life, purchasing a home. To find out more about Daniel you can visit him here at First Mortgage Home or contact him at DTinnin@firsthome.com.