Purchasing a home is one of the most important decisions you’ll ever make, and there are many steps to the process. But you don’t have to feel overwhelmed. Remember that my team and I are here to assist you through the process.
Here’s a basic rundown of how it works.
BEFORE YOU START SHOPPING
You may think that the process of buying a home starts with shopping for one. But you’re better off starting with a mortgage pre-approval, which will give you an idea about what you can afford. A pre-approval will also give you a stronger negotiating position when you’re ready to move forward with the purchase.
You’ll want to deal with a mortgage professional who will help find the right loan for you, and who is willing to keep you engaged and informed every step of the way.
Provide the lender with as much accurate information as possible during the loan application, including income, assets and outstanding debts.
You’ll be asked to provide documentation including pay stubs, checking and savings account balances, and two years’ worth of tax returns. Some of it may seem trivial, but it’s all necessary.
FINDING A HOME
That’s when you begin shopping for a house. You’ll want a Realtor with experience helping buyers. If you’d like, I can provide you with a list of local Realtors who have good reputations and proven track records.
One you’ve found the house you want, you will negotiate the terms of the sale. Those will include the price and possibly the terms of the loan as well.
You’ll have to get an appraisal on the home. Although lenders require it, an appraisal keeps you from overpaying.
You’ll also need a title search to make sure there are no liens on the property. Liens may have been placed because of outstanding debts by the owner, and will have to be cleared before you can close the deal.
Some loan programs will also require you to get inspections for flood or termite damage.
PATH TO HOMEOWNERSHIP
Your mortgage professional then sends all of the relevant information to the lending underwriter, who will review it and make the final decision about whether or not the loan should be approved.
You’ll eventually get an approval, denial or counter offer. The lender may ask you to put down more money to improve your debt-to-income ratio for the loan. If the property’s appraisal came in at less than the purchase price, you may also need to make a bigger down payment.
If you put down less than 20 percent on the loan, the lender may require you to get mortgage insurance. Lenders also ask for fire and hazard insurance on the replacement value of the structure. Depending on the property’s location, flood or earthquake insurance are possible requirements.
THE FINAL STEPS
Once everything is in place, you sign the final loan and escrow documents. The lender sends the loan amount to the title company, then authorizes the disbursement of loan proceeds.
The county recorder officially records documents transferring title.
At that point, all of your patience and work has paid off. Because you are now officially the owner of your new home.
If you’d like to get more information about the process of buying a home, give me a call any time. I’m happy to help.