Purchase
The process of buying a home may seem complicated when you've never done it before. Here is a brief chronology of events that will happen when you purchase a home.
Decide What You Can Afford By Consulting A Lending Advisor
What you can afford depends on your income, credit rating, current monthly expenses, down payment, program and the interest rate. There are some online tools you can use, and some tools that your real estate agent can help you with. While this is helpful it is always best to speak with a mortgage professional to determine how much you are qualified for and what payment you are comfortable with making. Just because you qualify for a higher amount, does not mean you have to purchase that amount.
Shop For A Home
You may already have a general idea of where you'd like to live based on where you're living now, where you grew up, where you have friends or family or where you work. A local real estate agent can help you find homes in that area, set a price range and determine the options that are most important to you in a home (number of bedrooms and bathrooms, lot size, age, etc.) Be realistic about what you are looking for and an experienced agent can suggest the home that they find to be most desirable.
Submit An Offer To Purchase
Discuss the process with your real estate agent. If the seller does not accept your offer and makes a counter offer, you may need to bargain until you both agree to the terms of the sale. When you plan to finance the purchase of your home, your sales contract will include the type of financing you are securing. Often times you can negotiate for the seller to pay for your closing costs or any repairs that you may notice at initial viewing of home.
Request A Home Inspection
Buying a home is one of the most important purchases you will make in your life, so protect yourself by making sure that the home you want to buy is in good condition. A home inspection is an evaluation of a home's condition by a trained expert. The inspector will spend several hours in the home examining the structure, appliances, slab, landscaping, and most every other physical element of the property. The inspector will create a report that details the soundness of the home and any issues that were found.
Now days you will receive a copy of your report within hours of the completed inspection, with full color pictures and detailed descriptions of any possible problems with the property.
When you make a written offer on a home, you state in the contract that the offer is contingent on a home inspection. You will have to pay for the inspection yourself, but it could keep you from buying a house that will cost you far more in repairs down the road.
Processing Your Loan
Typically you will have already decided on your loan program and down payment at this point, but you still have an opportunity to fine tune it. Once the inspection is complete and you are satisfied with the state of the property, your lender will order an appraisal on the home and you should have your documentation ready for loan processing. This will typically include the following:
- Two most recent pay stubs indicating your last 30 days of earnings
- Two most recent years of W-2’s or full tax returns if you are self-employed
- Two most recent months of bank statements including all liquid assets
- Verification that your earnest money cleared your account
There may be additional requirements needed on a case-by-case basis, however these are the main pieces of documentation needed for each transaction. There are other types of loan products that do not require all of these documents but they normally carry a higher rate of interest.
Once your lending advisor reviews all documents, they will submit your package with all information to an underwriter to review. The underwriter may request additional documents that they feel are necessary to fully approve the loan. Once your loan is fully approved, the final documents will be drawn up and sent to the title company for your signature.
Sign Papers
You're finally ready to go to closing, where you will sign an endless amount of paperwork. All documents are to be notarized and after you finish signing you will hand over a cashier's check if you are putting any money into the transaction. Typically, your loan should fund from the lender the same day and will record with the county that afternoon. After recording has taken place, you will get your keys and can start moving in your new home.