Step 1: The Big Meet with your mortgage broker. If you do not have one, your REALTOR® will have a list of bankers they usually work with and trust to do a great job for you. This is one of the most important parts of purchasing a home. The right or wrong mortgage broker can make or break a deal in a multiple offer situation. During this initial meeting, you can have your credit report run. This is a much more detailed report than you can get online. The banker can help you review your credit report and ensure that any errors are caught and remedied. It’s important that you feel comfortable with your mortgage banker. Find someone that you trust and can have open conversations with.
Step 2: The Scavenger Hunt. Yes, it’s fun to go on scavenger hunts and this one comes with a big prize at the end, home ownership. After reviewing your personal situation, your mortgage banker will give you a scavenger hunt list of all the documents needed to support your loan application. This list is not the same for everyone. It could include any of the following; Tax returns, W2s, K1s, pay stubs, bank statements, and more.
Step 3: The Review of the many loan options that are available to you. Again, this is not the same for everyone. Some will qualify for any loan, some will not qualify for a conventional loan and will need to review alternatives. Some buyers want only a 30 year fixed, and some will want the adjustable rate mortgage. There are lots of choices. So, you want to review all to see which suits your goals. Remember, your banker is there to help you get the best option available to you and is working hard to make this work.
Step 4: The Fun Part. Go home shopping with the confidence of knowing what price you qualify for and are comfortable with. Now that this part is done, you know exactly what your spending limits are. It helps in the decision making process. Your agent can now find you the perfect home in your price range.
Step 5: Success. You found your new home and it is time to make an offer. Your REALTOR® will want to make your offer as strong as possible. The variables that effect the strength of the offer are price, timing, strength of loan vs a cash offer, contingencies, and the emotional factors. Talk to your mortgage banker about strengthening your offer. Do you require an appraisal contingency? How fast can you close? Can your banker provide confirmation that you are well qualified? A great offer will have a letter from your lender stating that you qualify for the purchase price and they have verified your funds to close. Your banker and real estate agent work closely together to make this part a success.
Step 6: Acceptance. Your offer was accepted and now you are in escrow. At this point, you will put some money down at the title/escrow company to open escrow and this money gets applied towards your down payment. Generally it is 3% of the purchase price, however can vary. This is a nerve wracking time. Inspections, appraisals, negotiations are all happening so fast. This is sprint time. The more work you have done ahead of time with your mortgage banker, the better. Now is the time to focus on the house itself. It is not uncommon to get cold feet after the inspections, often times people realize at this point, their new home is used and not perfect. The inspectors job is to find every little thing that could possibly be wrong. Often times people think it has to be addressed right away. It doesn’t. Learning to triage this and categorizing what is important in the first few months to the first year, etc. It will all be okay. If you have completed your scavenger hunt of paperwork already. All the lender will need is the appraisal. As you get nervous, ask questions. Your realtor, banker, and inspectors are there to help and to guide you through this time. Rely on them.
Step 7: Closing on your new home: Gulp. After inspections and appraisal are done, you are satisfied this is the home of your dreams. You then remove the contingencies of the contract for inspections and appraisal. You are handing over the down payment. It’s a lot of money. You are signing all the closing and loan documents and there is so much to read. At this time, you have 3 guides; your realtor, your mortgage banker and your escrow officer. They know how exciting this time is and how daunting it can be. If you have concerns or questions, these 3 professionals are there to support you.
Step 8: Key day! Closing day occurs a day or so after you have signed all the documents and given the down payment to the escrow firm. Your loan will fund. Once it has funded, the escrow company will record the documents with the County. Once recorded the keys are handed over to you and your ownership will be complete. Time for the pizza and the movers…