My Home Buying Blueprint
The process of buying a home may seem intimidating and complicated at first. There are many angles to consider and big decisions to make, and it’s easy to feel lost and a bit overwhelmed. Don’t worry, though, because there is no reason to be anxious. The good news is you don’t have to go it alone!
As your mortgage advisor, my role is not only to be your point man in negotiations and handle all financial aspects of this process on your behalf, but to inform and educate you about this system. Have no fear, Brett the Mortgage Guy is here to walk you through each step and clear up any questions you may have, so you can relax and enter into this exciting stage of your life with confidence. With my guidance, you’ll be making informed decisions each and every step of the way.
Let's say you’re a prospective home buyer, ready to explore your options and take that big first step. Maybe you’ve reached out to a realtor or a mortgage advisor like me. What can you expect? Don’t worry, no matter who you are or what your situation is, making an effective plan for homeownership boils down to a few easy steps. Let’s take the mystery out of this process, shall we?
Pre-Approval: Your Financial Green Light
Your first step towards homeownership is working with a mortgage advisor and getting pre-approved for your loan. Don’t worry, this is a very simple step, made even easier because it can be done in-person, over the phone, or online.
All you need to do at this stage is submit a preliminary application I like to call “Life Trivia”, giving me some basic personal information about yourself, including your income, employment, financial background and required documentation to verify the information from the application. We'll review your documentation and determine the amount of money you’re qualified to borrow. This pre-approval is good for 90 days and is based on the current rates and terms available at the time of application.
Note that this pre-approval is not a mortgage quite yet. That comes a bit later in the process. This is the green light that signals your realtor and the eventual seller of your home that you have your financing in order and can afford to buy the home.
Working with a Realtor to Find the Right Home
Once you have your pre-approval, it’s time to bring in a realtor. People tend to begin with this step, and while this is absolutely fine, be aware that most realtors will start by referring you to a mortgage advisor for your pre-approval. You can save yourself some time by coming to me first.
You may have a certain realtor in mind who you know and trust, but if not, mortgage advisors like me work with realtors on a regular basis and we’ll typically know someone who will be a great fit for you and your vision.
Your realtor will ask you some questions about your lifestyle, goals and the type of home you are looking for so they can help narrow your search, and your hunt for the home of your dreams begins!
Submitting Your Offer
You’ve found your perfect home. Now it’s time to submit your offer to the seller. I’ll work along with your realtor to guide your decision on a fair offer for your future home. When you submit an offer, you generally write a check for an earnest money deposit (EMD), which is typically around 1% of the purchase price and is part of your overall down payment.
Submitting your offer tells the seller you’re serious about buying their home and allows both parties to move forward with the remaining steps.
Choosing Your Loan and Locking an Interest Rate
Congratulations, your offer has been accepted! Your next step is to choose your loan product and lock your interest rate. With my guidance this is a very simple step.
I will send you a list of the different financing options that are applicable to your situation and help you choose the best fit based on your qualifying factors and goals. This allows me to submit your file to an underwriter for processing. While we wait to hear back from the underwriter, let’s take a closer look at your future home.
Inspecting Your New Home
This important step uncovers any potential issues with your future home so you have a complete picture of what you're buying. While a home may seem perfect at first, you’ll want to be aware of possible problems before you move in. If you’ve seen the movie Money Pit, this is exactly what a home inspection aims to protect you from.
A proper home inspection will typically cost between $400-$500. Your inspector should thoroughly examine the following:
● Electrical system
● Plumbing system
● Heating and cooling systems
● Radon detection equipment, if applicable
● Walls, ceiling and flooring
● Windows and doors
● Basement and attic, if applicable
Note that the standard home inspection will not uncover hidden problems such as pests, mold, or asbestos, or flaws in inaccessible areas, such as underground wells or septic tanks. You may need to schedule additional inspections if you suspect these issues exist within the home.
After your home inspection is completed and comes back with no issues, an appraisal is ordered. This service is provided by an appraiser, who is paid upfront (typically about $500). Per federal regulations, the appraiser must be impartial and have no direct or indirect interest in the transaction. The appraiser evaluates the property and comparable homes in the local area to ensure the price you are paying is in line with the “actual value” and fair to both parties.
The key factors in determining the property’s value are recent sales of similar local properties and current market trends. The home’s amenities, square footage, floor plan, and number of bedrooms and bathrooms also heavily influence its value.
Meanwhile, the underwriter has been hard at work evaluating your file. An underwriter is a financial expert who takes a look at your finances and assesses how much risk a lender will take on if they decide to give you a loan. The underwriter will review your credit, income, employment, assets, appraisal, title and many other items to make the final determination and approve you for the loan required to buy the home.
There will be a short “turn time” between submission to the underwriter and the lender’s decision. This can be anywhere from a few days to several weeks, which is why we submit your file as early in the process as possible.
Closing: The Best Part
This is the final and most exciting step in the process! Once you complete this step you will become the legal owner of your new home!
After your loan is approved in underwriting, you’ll sign up for homeowner’s insurance, which is generally required by your lender. This will cover the cost to repair, replace, or rebuild your home if it is damaged. Most policies will also protect you with liability coverage against accidents in or on your property. The cost of this insurance is usually included in your mortgage payment.
You’ll also perform a final walkthrough of your home, which typically happens 24 hours before signing the closing paperwork. By this point, the seller will have removed their belongings and you will make sure the condition of your new home matches the agreed upon state. This is your chance to test out appliances, windows and doors, bathtubs and toilets, and anything else you can think of. Don’t rush it! This walkthrough is intended to give you peace of mind about your big purchase.
After you approve the state of your home, you’ll sign all of the final paperwork. While there will be many documents to sign, there is no need to rush. Take the time to read through everything carefully and don’t be afraid to ask me or your realtor any questions you may have. We are here to guide you through this.
Once you’ve signed everything, the process is complete! You’ll finally be given the keys to your new home. Congratulations, homeowner! Set your moving day!
Nothing to Fear and Everything to Gain
There you have it. From pre-approval to closing, this entire 8-step process typically takes between 30 and 45 days. Not so difficult, is it? As you can see, there is absolutely nothing to be anxious about. This process is made easy due to the efforts of your realtor and me, your faithful mortgage advisor. Now that you’re armed with knowledge of these simple steps to the homebuying process, it’s time to dream big and begin this very fulfilling chapter of your life.
Connect with me today and let’s start your journey to homeownership!