So… You’ve decided to stop renting and buy a home. You need help finding the right property for anticipated family growth, location, schools, etc… Here is a short explanation of how the whole process works.
First – Contact a mortgage broker or banker to get pre-qualified. You don’t want to look at $400,000 homes only to find out your income and debts will only allow you to purchase something in the $250,000 range.
Second – If you already have a realtor you are working with, contact them with the pre-approval so they can start lining up homes for you to see. If you do not yet have a realtor, ask your mortgage professional if there is a realtor they can recommend – realtors and mortgage professionals work hand in hand, none of them make a living if the transaction doesn’t close.
Third – Once you find the RIGHT home for you, your realtor will write up an offer to submit to the seller’s agent. At this stage there may be some negotiating back & forth depending on what you offer, how much in seller concessions you are asking for, etc.. You also may want to get a home inspection done because if there are any issues that come up you may need to have it addressed with the seller as well – either having them repair items or lowering the sale price to accommodate repairs after closing (we’ll dive more into repairs in a later post – some repairs are OK – LOTS of repairs could be problematic or require a rehab type loan).
Fourth – Once the contract is accepted you will agree upon a contingency date. This is in effect your deadline to have financing ready so you can close on your home and move in. At this step, your mortgage broker or banker will send you some legal disclosures and submit the full file into underwriting. A property appraisal will be done at this stage as well. The appraiser will determine the fair market value for the home. The Underwriter will work with the processing team at the mortgage company and may require further documentation to fully underwrite the file. They will calculate your income again, look over your credit, assets, etc.. Once they are done, they will issue what we call a CLEAR TO CLOSE. These are everyone’s three favorite words. This means the underwriter has completed the file and moved it into the closing dept to schedule your closing.
Fifth – Barring any delays (repairs needed, seller on vacation, etc…) we are ready to close! The lender will send closing documents to the title company or attorney office – this is where the closing will take place typically. You will then go in, sign LOADS of documents, and … wait for it… GET YOUR KEYS!
This is a very simplified explanation of the whole process. I will post further blogs detailing each step – common pitfalls – program specific information – etc… But this is it, in a nutshell. Not too bad, right?
As always – comment below with any questions or email me at firstname.lastname@example.org and I will be more than happy to help answer any questions!