That’s why we created this fun infographic to help prepare you for each step of the process. Just looking at it should make the whole idea of buying a home seem more attainable, plus it looks sort of like a board game.
We also interviewed one of our Mortgage Consultants, Christopher Cunningham, to help answer the most common questions from potential homeowners and clarify the process.
What do I qualify for?
This is one of the most common questions Christopher hears in his initial interactions with clients, and it has some surprising answers. He said that due to a wide variance in credit and income situations, the focus many advertisers place on mortgage rates can be misleading. Different loans have different terms, different insurance premiums, and different assistance programs, meaning rates are not always the sole means for determining payments. A better question might be what can I afford?
Everything online says…
We all love to research online, but for some this can be a pitfall. Trying to determine what kind of loan product you need (USDA, FDA, VA… enough with the acronyms already) is fine, but it’s a great idea to sit down with a lender who can help you determine all your options. The best type of loan program depends on a variety of factors, including interest rate, location of the home, first-time homebuyer status, and many others. Feel free to do your research, but remember that Wikipedia doesn’t know your specific family/income/credit/goals/dreams/hopes.
The main danger of not calling a consultant is that you may miss out on the chance to buy a home because you thought you couldn’t qualify. For example, Christopher said there are many people who believe because they’ve been involved in a foreclosure in the past, they can never buy a home again, which is often untrue.
For others, you may not qualify now, but a few simple steps (six more months in your current job, for example) may change all that.
Don’t be afraid to ask
“Most people are scared,” Christopher said. “A lot of people have a misconception about what bad credit is, what good credit is.” A common question he hears is “can I get a house with no down payment and very little in the bank?”
There are all kinds of programs out there designed for different situations, and most lenders will do their best to make the process work. Ask the questions.
Okay so walk me through the process
“The first thing I like to do,” Christopher said, “is interview them. We don’t even talk about loans.” This interview is to give the consultant some insight about your family situation, what you’re trying to accomplish (an upgrade? A new location?), what area you want to buy in, etc.
This conversation paves the way to the talk about the loan programs in the desired geographical area, and address questions about down payments, assets and payments to determine what type of loan best suits your needs.
Then you fill out the loan application!
Once the loan is pre-approved, you go find your house (unless it’s a refinance, in which case you probably already know where your house is). Make your offers and negotiate.
Step 3. You’ve picked the house, the seller has accepted your offer, you’ve decided on a closing date (escrow usually takes about 30 days). Go back to your lender, who will let you know what additional documents you need. Earnest money will be paid, and you’ll set dates for the home inspection.
Step 4. Your consultant will review the whole packet, going through it with a fine-toothed comb to make sure you’re not missing anything. An appraisal on the home and a title report will be ordered and the lender will make sure your income and assets are correct.
Step 5. Your packet will go to an underwriter, who checks that your loan meets all the guidelines. At this point, everything has been thoroughly reviewed. If everything is correct, the underwriting process can go really quickly – as fast as 24 hours, Christopher said.
Step 6. You're almost done! You get a call from the title company, alerting you that your documents are ready to sign (the lender keeps the original loan documents and the title company keeps the title and escrow documents). The lender wires money to the title company to pay any third parties who still need payment.
Step 7. The loan closes, the deed of trust is recorded, and you are now a homeowner. Congratulations!
We hope this helps take some of the fear of the unknown out of this super exciting event in your life.