HOME: FIND. BUY. PROTECT. The Second Leg.

Today officially kicks off National Homeownership Month, and our goal is to help educate and prepare future home buyers for the home buying process.  In our last post, we compared buying a home to standing on a stool.  It takes a lot of balance, and to keep from falling, you’ll need all three legs of the stool working together to hold you up.

Today we’ll focus on the second leg of the stool, the lender.  The lender helps you finance the home you want to purchase.  This part of the home buying process can be very complex, and understanding it end-to-end is important. Many people feel overwhelmed because of the amount of paperwork to be completed, but knowing what to expect will help you make sound decisions about your home purchase.  The more knowledgeable you are the better, but a good lender will be by your side every step of the way to prepare you for what happens next.


Pre-Qualification

The first person you’ll meet during this part of the process is your loan officer.  Your loan officer can assess your creditworthiness and determine your eligibility to purchase a home prior to you formally applying for a home loan through the “pre-qualification” process.  They’ll also evaluate your household income, debt, and assets to determine your “buying power”, or how much you can afford.  Your loan officer will discuss various loan types and terms of mortgages with you.  Loan officers are mortgage specialists, so they’re a good resource for helping you determine which mortgage option best suits your financial situation.  Having a letter of pre-qualification from a lender can help strengthen your negotiating position when making an offer on a home.  Keep in mind that you are not obligated to obtain financing from the lender who pre-qualifies you.


Preparation

Federal law requires your lender to provide you with a Loan Estimate, which includes a summary of your settlement charges, within three days of applying for a loan; however, prior to making an offer on a specific home, you can ask your loan officer to provide you with an estimated cost to close.  Doing so will provide you with an estimate of the amount of closing costs, escrows and prepaids you’ll need in order to purchase the home.  Having this information early may be helpful when budgeting the out-of-pocket costs of your home purchase.


Application

Your pre-qualification is not a guarantee that you’ll be approved for a loan.  Once you have a signed purchase agreement on the home you intend to buy, you’ll formally apply for a mortgage.  Again, you’re not obligated to apply with the same lender who pre-qualified you.  During this stage of the process, you will likely meet your loan processor.  The processor’s job is to prepare your loan information and application for presentation to the underwriter.  You’ll provide your processor with the appropriate documentation necessary to apply for your loan.  Your processor will ask you for a variety of documents, including, but not limited to, tax returns, W-2s, bank statements and pay stubs.  Your processor ensures that all the proper documentation is included in your file, all numbers are calculated correctly, and everything is in the proper order.  They will then send your file to the mortgage underwriter.


Authorization

Your underwriter is the decision maker and is authorized to assess whether or not you’re eligible for the mortgage loan you’re applying for.  Your underwriter will ultimately approve or reject your loan application based on your creditworthiness, employment history, assets, debts, and other factors.

Once you’ve completed the application process, your loan officer will provide you with a variety of documents outlining the costs associated with your loan, including the Loan Estimate and Closing Disclosure, to help prepare you for closing.   These forms are required by law, for your protection.  As noted earlier, within three business days of completing your loan application, your loan officer must provide you with a Loan Estimate which provides you with an estimate of your loan terms and details of your settlement charges should you be approved for a mortgage loan.  Once the underwriter approves the loan, your loan officer is required to provide you with your Closing Disclosure at least three business days before your scheduled closing is to occur.  This tool allows you to double-check that all of your loan details are correct.  Once you approve your Closing Disclosure, you’ll be ready to move forward to the closing.

Your lender is a lot like your Realtor®.  They also work for you 24/7 — whether you need a little more information or guidance, have questions about what happens next, or just need a shoulder to lean on in order to feel at ease.  Buying a home is likely the biggest financial decision of your entire life, and your lender doesn’t take this lightly.

To verify a lender, please visit www.nmlsconsumeraccess.org

“No representation is made that the quality of legal services to be performed is greater than the quality of legal services performed by other lawyers.” 

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HOME: FIND. BUY. PROTECT. The First Leg.

Next month is National Homeownership Month, and our goal is to help educate and prepare future home buyers for the home buying process.  Buying a house is an exciting time, but it’s similar to standing on a stool.  It takes a lot of balance, and to keep from falling, you’ll need all three legs of the stool working together to hold you up.  You’re probably asking yourself, “Buying a house is like a standing on a stool?  How so?”  Let me explain.


Today we’ll focus on the first leg of the stool, the Realtor®.  The one who helps you find the home you’ll eventually purchase.  Although there are hundreds of online resources available to help you search for homes for sale, the most reliable data is always going to come directly from the local Multiple Listing Service (MLS).  A Realtor® has the ability to provide you with the most up-to-date property listings, comparisons, and benchmarks through their paid subscription to their local MLS*.

While you may initially lean on these other resources to get an idea of the current real estate environment, a Realtor® will be able to keep you updated, almost to-the-minute, on the status of properties you may be interested in.  Through their access to the MLS, Realtors® are an invaluable resource for information on how long a particular home has been on the market, if it’s been listed more than once, its pricing history and how it compares to similar homes around it.  Keep in mind that sometimes properties are available, but not actively advertised.  A Realtor® can help identify those hidden opportunities, as well as help you avoid out-of-date listings that might be showing up as available online, but are actually no longer on the market.

Most Realtors® live and breathe real estate, and often times they can share information about a home that you wouldn’t otherwise know.  They can be great resources for insights into neighborhood specific information and trends.  For instance, they may have valuable information on HOA obligations for a specific building or community, potentially saving you from huge headaches due to fees or special assessments.  A Realtor® can also provide information on local utilities, zoning, schools, and more.


Finding the perfect home is the fun part, but then the real work begins.  Buying a home usually requires dozens of forms, reports, disclosures, and other documents.  Most Realtors® are immersed in real estate, and stay current with the complex, ever-changing real estate industry, including updates in regulations, laws, contracts and practices.  Their cultivated skills can help you prepare an attractive offer, navigate complex contract documents, negotiate the contract, and avoid delays or costly mistakes.

Plain and simple, your Realtor® is your advocate.  They work for you 24/7 — whether you need a little more information on a particular home, have questions about what happens next, or just need a shoulder to lean on in order to feel at ease with the offer you just put in.  Buying a home is likely the biggest financial (not to mention, emotional) decision of your entire life, and you want to do it right.  Guiding you through it isn’t a responsibility Realtors® take lightly.

To verify a Realtor®, please visit https://www.arello.com.

“No representation is made that the quality of legal services to be performed is greater than the quality of legal services performed by other lawyers.”