The Homebuying Process
The home buying process may seem overwhelming. Let's break it down so you'll know whats ahead; allowing you to prepare for the next step in your home-buying process!
During your home buying journey, it's VERY IMPORTANT that you don't change anything with your finances until after your loan has closed and funded. Don't take a new loan for new furniture or vehicles. Don't change jobs. Don't make major deposits or withdrawals from your account without talking to your mortgage broker first! If there are any changes made to these items, it could jeopardize or delay closing on your house!
Step One - The Mortgage Pre-Approval
Most Realtors will want you to be pre-approved before you start looking for a home. This lets the Realtor know that you are a serious buyer AND that you are able to go through with a purchase when you find the right house.
During the pre-approval process we'll talk about what you are hoping to purchase, and how much you are wanting to spend each month. After we talk, you'll fill out an application (only takes about 15-20 minutes) and then submit some basic documents;
1) Documents to verify income - How much do you make each month?
2) Documents to verify assets - How much money do you currently have?
3) How much debt do you currently have? This will show how much of your income is currently going towards paying down your debt
It usually takes about 24 hours to review your application, pull your mortgage credit score, and review your submitted documents and credit report to determine your pre-approval amount. I may request a few more documents during this time, depending on your personal situation. I'll send you a mortgage quote and your pre-approval letter when you're pre-approved.
Once you have your pre-approval letter, you can move on to....
Step Two - Find a Realtor and Begin House Hunting
This is an exciting time! You can start to search for that perfect house! If you don't already know a Realtor, no worries! I have a network of great realtors across the state of Texas who are great at what they do! Your Realtor will want to know what features you are looking for in a home and, the amount for which you have been pre-approved. Armed with this information, the Realtor will begin searching for homes that fit your wants and needs. They will also most likely set you up in a system that sends you emails/notifications as soon as a house with your qualifications hits the market. Once you find one that you like, let your Realtor know as soon as possible! They will schedule a showing with the seller so you can view the home. If you like what you see, you can move on to the next step!
Step Three - Offer Accepted
WooHoo! You found the perfect house!. Your Realtor will walk you through all of the steps to making a competitive offer in the market that you are in. Once the seller reviews the offer, they have three options: They can accept, deny or counter.
Deny - If they deny your offer that means they most likely got a better offer
from a different buyer OR your offer was submitted too low.
Counter - The buyer likes your offer but there might be something in it they want to change. This could be the price but could also be other things as well. This is where your expert Realtor will work with you to negotiate the deal.
Accept - This is what you love to see! The seller accepts your offer and you can move forward in the process!
Step Four - Mortgage Processing and Underwriting
Your Mortgage Broker (me!) will take the accepted contract on the home and being the process of getting the loan finalized. You and I will decide if you would like to "lock" or "float" your rate. To lock your rate means the rate won't change. To float your rate means your rate will continue to change with market fluctuations. I only recommend floating your rate if rates have been decreasing.
Next, you will receive your loan estimate and initial disclosures. This is the the first estimate of all of the costs involved with buying the home according to your contract and additional information related to your loan. You will need to sign this document package to show you intend to proceed with the mortgage process before we submit the loan to underwriting.
After the loan estimate and disclosures are signed, then your loan will be submitted to 'underwriting' where they will review the loan for approval. When they are done, we will receive Conditional Approval. Underwriting is the lending department that reviews all of the documents submitted and ultimately approves the loan to close. Conditional Approval gives us the list of every additional document we will need in order to close your loan and finalize your home purchase. In this step you might need to submit additional (or updated) documents to the Mortgage Broker. Some documents that are frequently requested from you are your new homeowner's insurance policy, a transaction history that your earnest deposit has cleared, and other documents that your mortgage broker will obtain on your behalf, like title work.
Once these documents are submitted, underwriting will review the new documents. Sometimes we will have to go through a second, or even third, approval process, requiring additional documents.
During this approval process, you will also be working with your Realtor to schedule inspections, and your mortgage broker will be coordinating the ordering of your appraisal. An appraisal gives the lender a 3rd party opinion on the value of your new home.
Once the underwriter gives final approval on the loan and no more documents are needed, you get the magic words: Cleared to Close!
Step Five - Cleared to Close
You did it! All documentation gathering is complete. The hard part is over!
Next, you will receive your closing disclosure. This is another version of your loan estimate, but with more numbers finalized. As invoices get turned in, your closing disclosure will be finalized and you will receive the Final Closing Disclosure and schedule your closing with the Title company. If you need to bring funds to closing, you can arrange your wire transfer or cashier's check.
Remember: it's VERY IMPORTANT that you don't change anything with your finances until after your loan has closed and funded. Don't take a new loan for new furniture or vehicles. Don't change jobs. If there are any changes made to these items, it could jeopardize or delay closing on your house!
This brings us to the last step in the process....
Step Six - Close and Move In!
It's closing day! Get ready to sign a lot of documents! Once you sign everything, you are the owner of a new home! Congratulations! You did it, new homeowner!