Eight Steps to a Successful Home Purchase
February 11, 2010
If you are thinking of purchasing a home, make sure you understand the process first. The following eight steps take you from beginning to end in the purchase process and will help make sense of what may be a foreign and overwhelming process.
Eight Steps to the Mortgage and Home Purchase Process
- Get mortgage quotes and loan preapproval. Mortgage lenders or mortgage brokers will collect your income and asset documentation, run your credit, and submit your file to an underwriter for approval. Today's guidelines can be tricky--the housing bust and recession have led to frequent regulatory and loan qualification changes--so it is important that a certified loan underwriter review your entire situation, including how much down payment you have available, to make a definitive loan decision. This is also where you can shop for the best mortgage rates, making sure your mortgage lender or mortgage broker has access to the best rates.
- Find the best realtor. If you are already working with a realtor, that will make things easy. Your loan officer will be in contact with your realtor to exchange information and discuss your file. If not, find a realtor through the National Association of Realtors, or through nationwide research companies such as Level 3 Research.
- Go house hunting. Now it is time for you to find that special home. If you are looking at bank-owned homes or short sales, be patient and be prepared to submit multiple offers. Make sure that the home is within your price range. Unless you are looking at a fixer-upper, look to see that the house is in good condition.
- Get into the contract. Your realtor will submit your approval letter, with a copy of your check for the initial deposit, your signed contract, and possibly proof of your down payment funds. Once the purchase contract is signed by both parties and terms are agreed upon, you are in contract. You have a specific time to close the loan and remove any contingencies that are in the contract. Make sure to discuss asking for seller concessions with your realtor, as this can save you thousands of dollars.
- Open escrow. The seller typically picks who will coordinate the escrow transaction. An escrow officer will receive all of the contracts, take the money, and disburse it when it is time. You will send your deposit money to the escrow officer, usually within three days of an agreed-upon contract. Additionally, the escrow officer acts as the neutral third party to the transaction.
- Get an appraisal and inspections. It's time to finish the mortgage loan process. Your loan file has already been started, but your loan officer will need updated bank statements and pay stubs. They'll order your appraisal (an independent evaluation of the value of the home), and your realtor will order your home inspection.
- Receive final approval for your mortgage loan. Your loan officer will submit all of the received items to the underwriter for a final loan approval. Remember, providing all of the requested documentation and a high credit score will give you access to the best mortgage rates. If there are any clarifications or additional documentation, it will be requested at this time. Next, loan documents will be ready for you to sign. You can either go the title office, or a mobile notary can come right to you. They will make a copy of everything you are signing for your records.
- Make it official! The final step is for the escrow officer to notify the county of your purchase. They will send documentation to the recorder's office to make it official. The only thing left to do now? Get your keys and move in.
