Buying a Home steps

making an offer

put together offer: terms settlement date deposit amount combine offer and purchase contract

once seller has accepted price and terms "meeting of the minds"

seller signs the offer

once pre approved

send all homes in their criteria, narrow down to top ten, narrow down to top five

buyer agents submits offer to listing agent

signed copy of deposit check pre approval letter offer

Contract to close Buyer side

-submits same info to lender ( buyer) buyer contact insurance company to start home insurance process loan approval process -once loan officer has contact, they will order the appraisal -will look at comparable sales and determine value -loan will go through underwriting: all paper work is verified (credit score, debt to income ratio, w-2, pay stubs, tax returns match) -then issue loan approval home inspections -buyer side: order home inspections -generally will have 7-10 days to do it and submit requests for repairs -if repairs need to be made then submit that in addendum to listing agent (negotiate costs) -title search, preliminary title report

Title Company

A buyer makes an offer on a home and the seller accepts. From that point forward, a title company steps in as the intermediary between all parties to record the necessary legal documents, and ultimately finalize the purchase or sale of a real estate property.

Unsecured Loan Commitment

A loan that doesn't have collateral backing it is primarily based on the borrower's creditworthiness . An unsecured credit card is one very basic example of an unsecured open-end loan commitment. Typically, the higher the borrower's credit score, the higher the credit limit. However, the interest rate may be higher than on a secured loan commitment because no collateral is backing the debt. Unsecured loans typically have a fixed minimum payment schedule and interest rate. The process often takes less paperwork and approval time than a secured loan commitment.

Pre-qualification vs. Pre-approval

A mortgage pre-qualification can be useful as an estimate of how much you can afford to spend on your home, but a pre-approval is much more valuable because it means the lender has checked your credit and verified your documentation to approve a specific loan amount (usually for a particular period, such as 90 days). Final loan approval occurs when you have an appraisal done and the loan is applied to a property -"The pre-qualification process is based on consumer-submitted data," -"Pre-approval is verified consumer data—for example, a credit check."

Title Commitment

A report outlining the current condition of the title - highlights any defects, liens, easements, or encroachments.

Secured Loan Commitment

A secured commitment is typically based on the borrower's creditworthiness with some form of collateral backing it. On the consumer level, a home equity line of credit (HELOC), in which the equity in a home is used as collateral, or a secured credit card, where money in a bank account serves as collateral, are two examples of open-end secured loan commitments. Because the credit limit is typically based on the value of the secured asset, the limit is often higher, the loan's interest rate lower and the payback time longer for a secured loan commitment than for an unsecured one. However, the approval process typically requires more paperwork and takes longer than with an unsecured loan. The lender holds the collateral's deed or title or places a lien on the asset until the loan is completely paid. Defaulting on a secured loan may result in the lender assuming ownership of and selling the secured asset, then using the proceeds to cover the loan.

pre approval

First, you have an opportunity to discuss loan options and budgeting with the lender. Second, the lender will check your credit and alert you to any problems. Third, you will learn the maximum amount you can borrow, which will give you an idea of your price range. However, you should be careful to estimate your comfort level with a given house payment rather than immediately aiming for the top of your spending limit. Lastly, most home sellers expect buyers to have a pre-approval letter and will be more willing to negotiate with you if you have proof that you can obtain financing.

Getting a Home Inspection

Inspecting the physical condition of a house is an important part of the home-buying process and should be included in your purchase contract as a condition of closing the sale. One or more professional inspectors should look for defects or malfunctions in the building's structure, systems, and physical components, such as the roof, plumbing, electrical and heating/cooling systems, floor surfaces and paint, windows and doors, and foundation, and detect pest infestations or dry rot and similar damage. The inspector should also examine the land around the house for issues concerning grading, drainage, retaining walls, and plants affecting the house. -Ask for disclosures before you get an inspection -Hire a Professional Inspector -This will take two or three hours and cost you from $200 to $500, depending on the location, size, age, and type of home. Accompany the inspector during the examination, so that you can learn more about the maintenance and preservation of the house, ask questions, and get a real sense of which problems are serious and which are relatively minor -Get a Pest Report -If the inspections bring problems to light--such as an antiquated plumbing system or major termite damage--you can negotiate to have the seller pay for necessary repairs or to lower the purchase price. Or, you can back out of the deal, assuming your contract is written to allow you to do so.

Who gets to pick the title company that will issue the owner policy of title insurance?

It depends. If the seller pays for both the owner policy and the lender policy of title insurance, then the seller can pick the title company without violating the Real Estate Settlement Procedures Act (RESPA). However, if the buyer pays for the owner policy, the seller cannot condition the sale of the property on the buyer purchasing the owner policy from a particular title company. Rather, the buyer would get to pick the title company.

Pre-Approval Qualification

Lenders partner with credit reporting agencies to obtain marketing lists for pre-approval offers. Pre-approvals are generated through soft inquiry analysis which allows a lender to analyze some of a borrower's credit profile information to determine if they meet specified lender characteristics. Generally, a borrower's credit score will be the leading factor for pre-approval qualification.

Pros and Cons of Loan Commitments

Open-end loan commitments are flexible and can be useful for paying unexpected short-term debt obligations or covering financial emergencies. In addition, HELOCs typically have low interest rates, making payments affordable, while secured credit cards can help consumers establish or rebuild their credit; paying their bill on time and keeping total credit card debt low will improve their credit scores, and in time they may be eligible for an unsecured credit card. The downside of a secured loan commitment is that borrowers who take out too much money and are unable to repay the loan may have to forfeit their collateral, which could, for example, mean losing their home.

final step of pre approval

The final step in the process is a loan commitment, which is only issued by a bank when it has approved you as the borrower, as well as the house in question—it's appraised at or above the sales price. The bank might also require more information if the appraiser brings up anything he feels should be investigated, such as structural problems or a faulty HVAC system. Your income and credit profile will be checked once again to ensure that nothing has changed since the initial approval, so this isn't the time to go out and finance a large furniture purchase.

title search

The title company performs a search to identify ownership history and any title issues, and then summarizes it in a report.

title company prepare to close

The title company schedules your settlement appointment, and then starts gathering the documentation needed to close from several other parties (HOA, lenders, HOI, etc.). -The buyer attends the settlement appointment to review and sign the final paperwork. -Title is transferred to the buyer and recorded with the county in the deed. Plus, money is distributed as outlined in the Closing Disclosure.

Pre approved continued

You must complete an official mortgage application to get pre-approved, and you must supply the lender with all the necessary documentation to perform an extensive check on your financial background and current credit rating. The lender can pre-approve you for a mortgage up to a specified amount after reviewing your finances. You'll also have a better idea of the interest rate you'll be charged on the loan at this point, because this is often based in part on your credit score, and you might even be able to lock in an interest rate. Some lenders charge an application fee for pre-approval, which can amount to several hundred dollars.

after choosing a home

You'll give your lender a copy of your purchase agreement and any other documentation necessary as part of the full underwriting process after you've made an offer. Your lender will hire a third-party certified or licensed contractor to do a home appraisal to make sure the house you want to buy is worth the amount you're going to borrow.

Loan Commitment

an agreement by a commercial bank or other financial institution to lend a business or individual a specified sum of money. The loan can take the form of a single lump sum or - in the case of an open-end loan commitment - a line of credit that the borrower can draw upon as needed, up to a predetermined limit.

To obtain a pre-approved loan

borrower must complete a credit application for the specific product. Some lenders may charge an application fee which can increase the costs of the loan. The credit application will require a borrower's income and social security number. Once a borrower completes the credit application the lender will verify their debt-to-income and do a hard inquiry analysis of the borrower's credit profile. Generally, a borrower's debt-to-income ratio must be 36% or less for approval and the borrower must meet the lender's credit score qualifications. Oftentimes a borrower's approved offer will vary significantly from their pre-approved offer which is due to the final underwriting analysis. -"A pre-qualification is a good indication of creditworthiness and the ability to borrow, but a pre-approval is the definitive word,"

1st step

get buyer agreement work on pre approval process

make contact

identify potential buyers in the next 6 months

ready to close

lender sends all documents to tilte company - all parties meet at title company and sign documents, seller delivers keys and any paperwork, checks -buyer can do final walk through

negotiations

once offer submitted go to negotiations: - seller accepts/counter offer/rejects -buyers agent and listing agent go back and forth

contract to close phase (seller)

title company -submit copy of signed contact and deposit to title company ( seller) -facilitate entry for home inspection