Understand the Process
Whether a first-timer or seasoned home buyer, your home buying and selling process can be as challenging as learning a new language. Before you make your move, it's important to first understand the steps involved and the buzzwords of the "deal" to ensure the smoothest transaction possible.
Your best source of information will be from your Realtor. The real estate industry and financing are constantly changing, so even if you've bought a home in the past the process may have changed. Friends and relatives are often well-meaning, but they may not have purchased or sold recently either and could be giving you inaccurate information.
So how does this work?
Get prequalified by a lender so you know how much you can afford and how much your payments will be.
Choose a Realtor who will represent you (ask about Buyer Representation). Your Realtor will have access to the Multiple Listing Service and can show you every house in town regardless of which agent or company has it listed.
Once you find a house you will make a written offer. When it's been completely accepted you are officially Under Contract!
Your Realtor will help you schedule inspections, deliver the contract to the lender and review the title commitment. There are a lot of things happening behind the scenes while you are under contract and your agent will be handling the details for you.
Once you've accepted the inspection, title commitment, and survey, and you have loan approval, you will be on your way to closing.
About a week prior to closing you can schedule utilities connections for the date of closing.
Closing typically takes place at the title company. When you go to sign documents, you will need to bring identification (usually your driver's license or passport) and your funds for closing. The funds for closing must be in the form of a money wire or cashier's check - the title company will not accept cash or personal checks.
The Loan Process
First, you need to prequalify for the loan with your financial institution. This involves answering a few simple questions, which in turn begins the application process. The type of home, approximate cost of the home, how much you'll want to borrow, the type of loan, and personal identification information, along with financial and employment histories, make up the prequalification phase. This is typically done on a single form and requires, at this point, no authentication or documentation.
It's usually after the prequalification has been done that your financial services representative works with you to complete the application. This includes determining the type of mortgage required and locking in an interest rate. An application fee is often required at this point, and sometimes, your lender will have online tools available to check on the approval status of your application.
During the documentation confirmation phase, you'll need to supply proof of current income, assets, expenses, and employment history. The lender will request a property appraisal or evaluation and a title search to avoid fraudulent activity. The documentation collected will satisfy the conditions required to approve the loan, and you'll be asked to lock in your interest rate and mortgage type.
Once the loan is approved, you are in the final stage of home ownership financing. At this point, you may have the option to arrange for the automatic deduction of your monthly or biweekly mortgage payment from a checking or savings account. Tax and interest information is reviewed, and information about an escrow (or reserve) account is confirmed. An amortization schedule is then provided to you.