Buying a home may seem like a daunting process but being prepared can ease your mind. It is important to understand what to expect when preparing to buy a home, and what to expect during the home buying process. Below we’ve provided a short outline of the five main home loan milestones of the home buying process.
Home Loan Milestone #1: Pre-Qualification
You’re ready to buy a home, congratulations! The very first step to take if you are ready to start your new home search is to get pre-qualified. This is a no-cost, no-commitment, 10-20 minute analysis that will give you a great starting point for your new home loan. Especially during times of social distancing, we’ve made this process even easier by offering pre-qualification applications to be taken over the phone or by completing an online form. This will allow us to determine an estimate of your maximum monthly mortgage payment and how much you can borrow. Pre-qualifying for a loan before you go home shopping helps you set a budget and strengthen your negotiating position when making an offer.
Home Loan Milestone #2: Application
Once you have found a home, you will make an offer to buy it from the seller. A real estate professional will conduct negotiations and a contract will be submitted to purchase, accompanied by the pre-qualification letter. Once your offer is accepted, you will receive your initial disclosure package and you will begin the application process. You will most likely need to provide your loan officer and processor with updated income and asset documentation, such as pay stubs and bank statements. To ensure your loan stays on track, you’ll want to have your docs completed quickly and thoroughly.
Home Loan Milestone #3: Processing
In this step of the process, your appraisal and title work will be ordered. Once all necessary documentation is collected, the processor will review everything for completion and accuracy. He/she will verify information on the title work, appraisal, credit report, and any additional docs needed. Once the processor has completely reviewed the full application package, he/she will pass it on to the underwriter. Your loan officer will keep you informed, answer any questions and navigate you through every step of the way.
Home Loan Milestone #4: Underwriting
Once your loan gets to this milestone, the underwriter will review the entire loan package to determine if your loan meets the guidelines for approval. Your underwriter will review your disclosures, credit, asset documentation, employment, appraisal, and additional documents along with the loan program’s guidelines and regulations. Once conditions have been met and any contingencies on the loan have been cleared, the underwriter will give the clear to close/final approval and the loan is sent to closing.
Home Loan Milestone #5: Closing
You are now in the final home loan milestone, closing! This is the best part! A date, time, and location should have already been confirmed for closing. At least 3 days prior to closing, you will receive your closing disclosure (CD). This document will show you your closing costs, terms of the loan, and how much money you need to bring to settlement. Closing may look a bit different due to COVID-19 restrictions. You may be asked to wear masks, wait in your car, or sign documents without other parties present. Once documents are signed, funds will be distributed, and ownership of the property will transfer from the current owners to you. The house is finally yours!
It may seem like a long process, but we strive to make it as seamless as possible. If you are ready to start your home buying process, contact one of our loan officers today!