The Loan Process When Buying a Home
From Loan Officer Trevor Higgins of Fairway Mortgage
Here is the 411 on buying a Home: A Step-By-Step Walkthrough of the process
Pre-Qualifying – Get pre-qualified for a mortgage and know in advance exactly how much house you can afford. Discuss with your mortgage professional the pros & cons of different options and how they will affect Payment, Closing Costs & Down payment to fit your needs.
Loan Search – Put yourself in the hands of an experienced mortgage professional, someone who will help you to determine which financing options best suit your needs today and well into the future.
Pre-Approval Application – It’s crucial to supply the lender with as much information as possible, as accurately as possible. All outstanding debts, as well as assets and income, should be included. Completing this step will also increase your negotiating power since you’ll be viewed as a ‘cash buyer’.
Documentation – Paperwork supporting the application must also be submitted. Information commonly sought includes pay stubs, two years’ tax returns, and account statements verifying the source of the down payment, funds to close and reserves. Much like a legal case, the documents you provide must support the information on your application beyond all reasonable doubt.
Select a Real Estate Agent – The knowledge and experience of a truly professional Real Estate Advisor can be one of your most valuable assets in the Home Buying Process. Not only can they save you valuable time in finding the perfect house, but can also help you better prepare to win a better deal on the home of your dreams.
The Hunt – Begin shopping for a house. Once you find the right one, the terms of the sale will be negotiated, including the price and potentially the terms of the loan being sought. Work closely with your Mortgage & Real Estate Professional to increase your odds of success.
Appraisal, Title Examination and other inspections – Lenders require an appraisal on all home sales. By knowing the true value of the home, the borrower is protected from overpaying. Title Search is the time when any liens against the property are discovered. A lien may have been placed on a property to ensure payment of outstanding debts by the owner. All liens must be cleared before a transaction can be completed. Termite and other 3rd Party Home Inspections may be required for your loan, but also can protect you from potential hidden issues that can be costly to correct.
Processor’s Review & File Submission – All pertinent information will be packaged by your mortgage professional and sent to the lending underwriter, including any explanations that may be needed, such as reasons for derogatory credit.
Underwriter’s Review – Based on the information put together by the loan professional & their team, the underwriter makes the final decision regarding whether a loan is approved.
Approval, Denial or Counter Offer – In order to approve a loan, the lender may ask the borrowers for additional information or recommend and adjustment to the structure of the loan to reduce the lenders risk and meet the lenders guidelines. Your Mortgage Professional will walk you through what needs to be done to complete the loan at this stage.
Insurance – Lenders require fire and hazard (homeowners) insurance on the replacement value of the structure. Flood insurance will also be required if the property is located in a flood zone. In some areas, additional coverage such as earthquake insurance may be required in addition. Be careful not to wait too long to shop for your insurance, as some companies require additional inspections to issue a policy binder.
Signing and Funding – During this step, final loan and escrow documents are signed and the lender will send a wire or check for the amount of the loan to the title company. Depending on the laws in your state this may be done at the same time, or may require a waiting period of a few days, check with your mortgage advisor for what to expect in your area.
Congratulations, you are now a homeowner! Be sure to thank your Mortgage and Real Estate professional for their hard work. Introduce them to your friends, family & colleagues who could benefit from a ‘Home Upgrade’. Your team would love to help the folks you know, that would love to be in a home that better fits the needs of their family.
We hope this outline is helpful in understanding some of the important steps and timelines for buying a home, but of course, if you do have any questions please don’t hesitate to ask. We are here to make this as smooth and efficient a process as possible.
Trevor Higgins 1410557