House hunting can be one of the most exciting times of your life. It also can be one of the most confusing and daunting tasks you will go through. But by following these steps and reaching out to me to start the process, we can keep it an enjoyable and rewarding experience.
Step One: Pre-qualification
Think about walking around the mall or main street shops when you are just window shopping. That’s kind of like getting pre-qualified. It’s the first step when starting to look for a home.
During this step, you work with a mortgage lender, like myself, who will ask questions about your goals and preferences for the purchase. We will ask for your last two years employment and income history as well as details around where your down payment will come from. This step also involves a credit check so we can have your most recent credit scores and history.
We then analyze this info with your preferences and mortgage guidelines in mind. I will then give you feedback on a suggested strategy and discuss your next steps.
This is not the time to be making an offer just yet. That comes with the next step.
Step Two: Pre-approval
With this step, you likely have found the home you want to buy. Think of this as actually walking into the store you strolled by and trying on that new outfit. You’re getting serious about buying a home and have your prequalification and initial loan details.
This step is where your lender reviews the documents that support all that info on your application. This includes what was used to verify income and down payment information:
Paystubs
Bank statements
W2s
Tax returns
Explanation for past credit events
Divorce decrees or bankruptcy docs
We will confirm everything is shipshape with that information, establish a maximum sales price you qualify for and estimate a monthly payment for that price.
At this point the lender has done all the due diligence that’s possible and you’re ready to make an offer on a home.
It’s important to know that pre-approvals usually last for 90-120 days, which should give you plenty of time to get this done before you start house hunting.
Step Three: Under Contract
This is the equivalent to going to the register to pay for those new shoes. So, what exactly happens when you are under contract and you get to celebrate? Quite a lot.
When it comes to getting your loan approved, connect with your lender as soon as your offer is accepted. You likely will be able to lock your interest rate and sign disclosures specific to your new home and loan details.
The appraisal will get ordered and you will want to choose an insurance company. If you’ve already given supporting documents, some things like paystubs and bank statements may need to be updated.
We will then review this new info and loan details, like the payment and money needed for the closing. The appraisal and ownership history and other property also will be evaluated. This process is called underwriting and once that’s complete your loan has final approval and you are clear to close.
I know much of this can be confusing. That’s why it is my mission to make mortgages make sense. Follow me for more mortgage tips.
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