How to Buy a House
The Loan Process for Buying a Home
Buying a home is an exciting yet stressful time, especially if you’re a first-time homeowner. Many buyers don’t realize that there’s a lot of prep work to do before you even start looking at homes.
How much can you comfortably afford
Once you’ve decided that you want to buy a home, you should determine what home loan payments you can comfortably afford. There are many tools available such as an affordability calculator that gives you an idea of what your payments would be. Quickly see how much interest you could pay and your estimated principal balances. You can even determine the impact of any mortgage principal prepayments for a full yearly or monthly amortization schedule.
Determine which home loan best suits your needs
There are many home purchase loan options available from first-time buyer programs to traditional conventional, jumbo, and FHA loans. There are 30-year and 15-year fixed loans as well as adjustable and hybrid loans such as 5/1 ARM or 3/1 ARM. If you’re interested in lower payments, an interest-only loan may be a good option for you. With all the options available, you need expert advice to help you choose the right home loan for your situation.
Start shopping houses
This is the fun part. Once you’ve been pre-approved for a mortgage and have an idea of what price range you qualify for, you can work with me to view homes for sale in the areas you would like to live. Once you find a home you like, we can work up an offer and complete a purchase agreement. The seller has the option to submit a counter-offer and you may go through several rounds of counters. Once you and the seller agree to the price and terms, escrow will be opened. Typical escrow periods are 30 days but 45 and 60-day escrows are not uncommon.
Review your home loan application and update your file
Depending on how much time has passed since you were issued your mortgage pre-approval, you may need to update your information and send updated documents. Once your file has been updated, your home-buying specialist will go over the details of your loan program, confirm the rate that you want, and go over your closing fees. Your specialist will make sure that you understand every detail of your home loan program and answer any questions you have before moving forward.
Lock your mortgage rate
After your signed lock and agreement and lock deposit has been received, your licensed loan officer will provide you a list of items to fax or e-mail so that your information is verified to get your loan approved and closed quickly. After that, you will be contacted to schedule the appraisal inspection. It is important to schedule the appraisal appointment as quickly as possible to prevent any delays in your closing.
Home inspection and appraisal
Shortly after escrow is opened, it is advisable to schedule a home inspection with a professional who will walk you through the property to look for any red flags such as structural damages or appliances that may not be working properly and other items that may need to be fixed. It is a small investment for some peace of mind. Any major issues would need to be addressed before the close of the escrow date. While your loan is being reviewed and processed, the lender will schedule an appraisal appointment with the seller’s agent to confirm the value of the home. Unlike a home inspection, that appraisal appointment is a requirement that the home is worth what you are paying for it.
Mortgage approval, signing, and closing
Once everything your lender has everything they need, they will submit your complete file to the underwriting department for approval. Once approved, your lender will prepare home loan documents for you to sign. Generally, you will sign your loan documents at the escrow or title office and it will generally take between an hour and an hour and a half. After your lender receives the signed loan documents back, they will review your loan file one more time to make sure they have everything they need. If everything looks good, your loan will fund 2 to 3 days after your signing, and you will get the keys to your new home!
Information courtesy of The Loan Depot