Preparing To Buy A Home

A little planning can make the process smoother

serious about buying a home. “Preapproval is written confirmation that a lender has committed a certain dollar amount for the purchase of your future home, which helps narrow your search to homes that are within your price range. This process involves the home buyer completing a loan application and submitting all of their income, outstanding debts, and credit documentation for the lender to review,” she says.

Simon says, the preapproval letter communicates that you’ve completed several critical steps toward obtaining your mortgage, which may place your bid for a home ahead of competitors who may not know if they qualify for a loan large enough to purchase the property. “A preapproval letter will state the loan amount and mortgage type so the home buyer can shop for a house that fits within their budget and price range.” You will also know how much money you’ll need for a down payment and closing costs.

Homeowners can select a mortgage broker or a bank loan officer to finance their mortgage. “In general-market terms, a loan officer works for a specific lender and coordinates with the home buyer on behalf of the lender. A mortgage broker is an independent businessperson who works with a number of lenders and offers these lenders’ products to prospective home buyers,” Simon explains.

Shop for a home within your budget. Sharp advises his clients to apply what they’ve learned about debt-to-income ratio in their home buyer’s training classes to determine how large a mortgage payment they can truly afford. Then view several properties for the best value. When you find the home you want, you’ll be asked to sign a purchase contract and to make a deposit of “earnest money” for the home.

Get ready for the closing. Bring a new pen, preferably black, as all documents pertaining to the home are signed at this meeting. It’s essential to have a real estate attorney at this meeting to check all paperwork before you sign. At the end of the meeting, which may last longer than an hour, you’ll receive keys to your new home.

The closing date is set when the mortgage is approved and a commitment letter is signed by a lender. The buyer should be aware of all the closing costs before attending the meeting to avoid “sticker shock.” There are several key players attending the closing. Along with the prospective homeowner, there’s the seller, the closing agent, the title insurance representative, and the escrow agent. The latter three can be individuals or one person who handles all the aspects. Be sure to read and understand all the documentation prior to signing. For most, a house is the single most important, and expensive, purchase they will ever make. Making sure you understand the process is critical.

As lengthy as the steps to homeownership may appear, the process works when you are properly prepared. And with newer loan products like the “no doc” (no document) loan, some of the financial hurdles of obtaining a mortgage can be eliminated. After Davis-Howard got married,

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