Understanding the Home Buying Process
Buying a new home is an interesting process, and it’s important to understand the steps involved so you can make sure you do things in the most efficient and effective way possible. Your time and money are valuable and 5280Lend is here to save both of those resources for you. We are EXPERTS at guiding you through the home buying process!
Step One: Before you Shop
Before you even begin looking at properties, you should do the following:
- Figure out where your down payment is coming from. Let’s talk through the options to determine both how much you can afford to put down and how much you actually should put down—these may not end up being the same figure.
- Decide how much home you can afford. This is another way of referring to the amount of the loan you plan to take out. Consider that the amount you can afford might not be the amount you are willing to borrow—you may get approved for a larger loan than you wish to take on.
- Examine your credit. Some aspects of your credit score are fairly long-term oriented, but there may be some things you can do to bring a low score up quickly. Let’s talk about things first before making any big moves. Sometimes you would be surprised at how ILL-logical the credit scoring system can be!
- Figure out how all this fits into your long term financial plan. This might be a much harder question to answer. Depending on what phase of life you are in, you might be thinking of big, comprehensive planning. Whatever your situation is, however, our goal is to help you see how homeownership fits into the big puzzle that life is!
Step Two: After Finding a Home
Once you’ve found the right home, it’s time to move toward executing on and finalizing your purchase. Here’s what you should be keeping in mind:
- The contract should be complete, with every detail agreed upon by every party. Make sure you’ve reviewed the terms and deadlines, so that you know when you need to have things accomplished and completed, and you know when you can expect the other party/parties to have completed their own responsibilities. Your Real Estate Agent will help you make sure that these details are dealt with.
- Make sure your mortgage lender has everything they need. This should include the loan application and disclosure of terms, your paycheck stubs, W-2 forms, tax returns, and bank statements, and proof of homeowner’s insurance. If your lender requires anything else, they will let you know.
- Get your home professionally inspected. You don’t want to finalize the sale and then realize the next day that your foundation is cracking. Often, if a problem is found, the seller will reduce the price and you can use the freed-up money to have the issue fixed. A good Home Inspector is one of the best insurance policies that you will ever get!
- An appraisal report should be completed to verify the value of the home. Your lender will order this for you, and go over a copy of it with you to make sure you understand the value of your new home.
- Once your appraisal is completed, that and the rest of your loan file will be submitted to the lender’s underwriter who will finalize the approval of your loan. Once that is complete, you will review closing figures and make sure that everything is ready for your closing. You and your lender should be in fairly frequent communication at this point and they should be making sure that you are well prepared for your closing.
- By the time you are actually closing, most of this should be a formality. Your Lender and your Real Estate Agent should have covered almost every detail so that the only thing you have to worry about now is signing your documents and then MOVING!