Understanding The Process Of Purchasing A Home
UNDERSTANDING THE PROCESS OF PURCHASING A HOME
STEPS TO A SUCCESSFUL CLOSING TO FIRST TIME BUYERS
1) Mortgage Qualification - Check with your Mortgage Professional the amount you qualify for to purchase a home. This step should be a prerequisite to any “home hunting”. You will also want to know how much will be your monthly payments (do not forget to ask the Loan officer to include on that principal, the interest, taxes, insurance (if applicable), mortgage insurance (if applicable) and, if you are purchasing a property in an HOA or a Condominium, you need to consider the association fees as well. Ask how much down payment you need to give, your interest rates, if the Loan will have a penalty in case you want to pay in full the amount borrowed in the future, what king of financing you are getting (FHA, VA, Conventional), how long time is the term of the mortgage, if the interest rate is fixed or variable and how much will be your closing costs.
When visiting your Loan Officer be prepared with the following basic documentation:
last 2 years of income tax and W-2's
last 4 pay-stubs
last 3 bank statements (checking, savings, money market...)
Get a Pre-Approval Letter from your Loan Officer. You will need that document when submitting an offer.
(Further documentation can be asked to you by the Loan Officer).
2) Property Location and Selection of a Realtor® - After you know how much you can afford is time to decide where you want to live and select an experienced Realtor. Competence, knowledge and responsiveness are the keys factor to choose a good Realtor. It is very important to chose a Realtor that knows to listen what you are looking for and show to you what you want to see.
3) You chose a property. Time to submit an offer to the Seller - An offer becomes a binding contract when both parties agree to all of the terms and sign the contract document.
4) Binding Contract - Effective Date - Once you and the seller agree on terms, in writing, by signing the contract, you are “under contract”. The date that occurs is called the Effective Date. Immediately after that date starts to count time for inspections, condo application (if applicable), loan application and commitment ... Time is the essence of the Contract, do no forget about that.
5) Loan Application - Your Lender should have all your information to underwrite your loan at this point; but, you may need to update some of those documentation, such as recent pay stubs, bank statements, etc... A copy of the Purchase and Sale Contract, Riders and/or Addendums must be delivered to the Loan Officer.
6) Lender will request the Appraisal, Condo Questionnaire (if buying in a Condo) and the Title Commitment in order to get your loan approved. Appraisal - A determination of value. Your lender will send an appraiser to the property to assess the “value” of the property.
7) Lender will send to Title Company the Title Request and also request Preliminary Closing Figures - The Lender will usually request preliminary closing costs from the title company along with the title request.
8) Inspections - Simultaneously is also time to contract a Licensed Home Inspector and inspect the property.
9) Association Application - You must also complete your application for approval into the association (if applicable). There may be multiple associations.
10) Title Examination/ Lien Search / Survey/ Association Estoppel:
The title to your property is a history of ownership. Any of the past owners could have judgments against them which could attach to the property. In addition to mortgage liens, the property could have liens on it placed by contractors, associations and recorded code violations.
A lien search provides us with information on any unrecorded matters such as unrecorded code violations, open permits or outstanding taxes.
A survey provides us with an accurate legal description to your property as well as a determination as to whether there are any encroachments onto the property from neighboring properties or from the property onto neighboring properties. (in case of buying a single family home).
A form completed by the association indicating whether regular assessment dues are current and whether there are any special assessments owed or pending by the Seller.
11) Lender will request for purchase of a Insurance Policy. Lender will inform value of premiums and what insurance is needed. (Do no confuse that with Title Insurance).
12) Once the title commitment, lien search and survey (if applicable) are completed, the title company will send this information to all parties.
13) You are almost there - At this point in the process, your inspection has long been completed and you have decided to proceed with the purchase of this property.
Your loan application as well as all financial document should have been in the hands of your lender for some time. Appraisal should be complete and your lender should have asked you for any follow up information.
All association applications (if applicable) should be submitted and you should have received approval or know what date approval will be issued.
Your title company should have provided you with copies of the title commitment; lien / permit search as well as survey and association payoff statements and should have explained all aspects of each to you.
14) Commitment Letter - A loan commitment (or loan approval) is your lender’s agreement to lend. Lender has certain number of days after the Effective Date to present to Seller the Loan Commitment. Don't forget 'Time is the essence of the Contract'.
15) A loan commitment could have a number of conditions. After those conditions are cleared , Lender will inform that they are “CLEAR TO CLOSE”. This is your lender’s indication to you that you may close in a few days.
16) Final Closing Figures - The lender will provide their final figures to the title company and in return, the title company will provide the lender with a completed document with all sums due all parties.
17) Approval of the figures - After Lender approve the figures a closing can be scheduled.
18) Walk-Through - You (The Buyer) will do a walk-through on the property.
19) The title company will provide you with an amount you need to wire into the title company account for closing.
20) Closing - You will sign all the required documentation. Seller will sign the deed. You will receive the keys of the property.
And, Congratulations, you just bought a property. You are a Homeowner!
Author: ANA NASCIMENTO
September 17th 2018
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