Home Buying Process
These are the steps that most home buyers go through. The cooperation of all parties involved is very important to a successful closing.Expand All | Collapse All
There's the down payment. This might be 3.5% to 20% of the purchase price (unless it's a VA loan). But the home buying expenses don't stop there. You will also have to pay closing costs on the loan and impound accounts if required, and those can add up to several thousand dollars. Some lenders require additional cash reserves, above and beyond these things.
Realize the importance of setting a budget before talking to any mortgage lenders. Tally up monthly expenses and subtract this number from the net monthly income (i.e., take-home pay). Be careful to allow for savings account contributions, entertainment / lifestyle expenses, and other things that are important. You make the decision of your comfort level to make a monthly mortgage for a home loan.
Mortgage lenders will review credit scores when you apply for a loan. It is one of the first things the lender will look at. Lenders use credit scores when making their approval decisions, and also when assigning an interest rate to the loan. So check your scores in advance. Review the credit report to make sure they don't contain any errors.
During the mortgage pre-approval process, the lender will examine the financial situation to see if the buyer(s) qualify for a loan. They'll also tell you how much of a home loan you can get. It doesn't guarantee that you will actually get that amount, but it does give them a ballpark figure to work with. This helps the family in two ways. It helps narrow the search to properties they can afford, and it helps ensure that sellers will take them seriously. Many sellers, especially bank owned properties and short sales consider a pre-approval letter based on actual review and receipt of the buyers documentation. They include last two years w2's and tax returns, (3 years for self employed and profit & loss statement), last two paycheck stubs, two months bank statements, copy of retirement accounts, stocks, bonds etc. and have completed a 1003 loan application. For V.A. buyers, in addition they require a copy of their DD214 and a V.A. certificate of eligibility. This gives the lender an actual picture of the buyer's financial strengths for a loan. Note: if you are borrowing any money for the purchase of a home, from a relative or friend, ask about the "Gift Letter" process.
We go out and look for your home. This is the most exciting part of the home buying process for most people, especially for first-time buyers. You have established a budget, saved up for the down payment and other costs, and pre-approved by a mortgage lender.
After house hunting, you have found the home for your family. It's in the neighborhood you like, and it is well within your budget. Now you need to make an offer to buy the house. I will pull up a list of comparable sales. These are similar homes that were recently sold in the same neighborhood. Use this data to determine (and support) the offer amount. The offer includes contingencies for financing and home inspection. You will need a monetary deposit with a check to submit an offer. This deposit is held un-cashed until escrow is opened.
Recommended not to skip. Especially if you buy a home "AS IS". Usually requested in a Short Sale or Bank Owned. Many times the banks will not want to do any work and falls on the buyer. You can't look at the house and tell what condition it's in. You can see the obvious surface flaws. But it's what lies beneath the surface that really concerns them. This is why they hire a home inspector. The home inspection is an important part of the home buying process. (the seller's agent will order the termite report on the seller's behalf, unless the buyer is requested to do so in a short sale or bank owned property). Make a contingency in the contract that requires a satisfactory home inspection. The home inspector will examine the structure of the house and all of the installed systems. The fee for the home inspection varies and is non-refundable. Don't forget to ask me about the "One Year Home Protection Plan"
For this step, the mortgage lender places an order and you will be contacted for payment. They will send a professional appraiser to determine the value of the home. In most cases, the lender has a larger financial stake in the deal. So they want to make sure the house is worth the amount agreed to pay for it. If the home "meets appraisal" (meaning it is worth at least as much as the purchase price), then the lender goes forward. If the appraisal comes in low, we renegotiate the price. You may ask the seller to lower the price, split the difference or they may walk away from the deal. This fee is non-refundable.
When the loan is submitted to the underwriters of the loan, be prepared to submit ASAP any additional items that may be requested for the loan approval. These items will vary. Be prepared and be "PATIENT" during this process. As newer guidelines are imposed with the changing of the lending industry, it may seem at times lengthy and never ending.
Once your loan has been approved, loan docs will be ordered. (There may be additional items requested by the bank which will be conditioned for funding the loan). The loan docs are then prepared signing with the notary. You will have the choice of going to escrow or have a notary come to your home for the signing. Please make sure you review your loan docs and get the loan you applied for! Escrow will inform you of the amount of funds needed to close. The funds must be delivered to escrow by cashier's check, but this may delay closing by two days waiting for the funds to clear. Preferably it is recommended to wire the funds from your account directly to the designated account escrow instructs you. There is no waiting period.
Once the loan docs are signed, they are returned to the bank for final review making sure they have everything they require for funding. This can take 24 to 72 hrs.
When the loan is finally funded (the commitment of the funds for the loan) you are on the home stretch. Once funded, the deed is recorded (the title for the property is transferred from the seller to the buyer) within 24 hours and Congratulations, The Home is Yours. Arrangements for the keys and possession are then made by me. The escrow will then finalize all of the closing paperwork. The sellers will then get their proceeds, if any and closing statement. The buyers closing statements will be sent to where the buyer has instructed escrow to mail them to.
DO NOT CHARGE, BUY LARGE ITEM TICKETS, APPLY FOR CREDIT OR MAKE A JOB OR CAREER CHANGE UNTIL AFTER ESCROW CLOSES.
Remember, there is NO guarantee getting the home until it is recorded. Anything can happen during the process.
Types of purchases: All Cash, Conventional, FHA, VA, VA No No, Cal-Vet, Reverse Mortgage and there are some city assist programs.