Purchasing a home should not be a complicated process. It should be exciting, not stressful. And this is where we come in.
We always stress the importance of having an initial meeting with a mortgage lending professional a few months before planning to purchase a home. This will eliminate many potential issues that will invariably come up if you are not prepared. Many home buyers make the mistake of signing a contract first and seeing a mortgage lending professional later. But preparation is key! So get your documents in order, review your credit, understand your potential expenses, choose the right program, and get a formal pre-approval to ensure that the process will be much easier. And, who knows, being prepared might even help you secure a better rate.
At Opportune, Inc., when you plan to purchase a home, we recommend consulting with a team that has decades of experience. If you live Chicago, greater Chicagoland, or anywhere in Illinois, you should work with a trusted local lender that can help you when you buying your home.
Getting pre-approved for a home loan is the key to a smooth home buying process. And what is even better, it doesn’t take much time.
Pre-approvals involve pulling your credit score and credit history from a respected third-party. With that credit report, your lender can examine if you have a history of making payments on time and in full. As a result, your lender will tell you exactly which loans you qualify for. Now you won’t have to worry about wasting a bunch of time looking at houses that aren’t in your price range.
Mortgage pre-approvals are also a great way to show a seller that you’re a serious buyer and gives you much more standing while negotiating the price of a home. So before setting out in search for a new home, get approved. It will save you time and money.
Now here’s the fun part: House shopping. So grab your lender pre-approval and approach a real estate agent you can trust.
The easiest and most convenient way to start looking for your new home is by harnessing the power of the internet. But before you dive in head first, there are a couple things you should know.
First, it’s important to understand that real estate portals rarely ever price listed homes accurately. In fact, you can expect around a 10% difference in most cases. So if you’re pre-approved for a $300,000 loan, set the search parameters to include homes up to $330,000. Second, realize that portals are often not up-to-date and never show every house on the market.
Once you and your experienced real-estate agent have found a house you really like, it’s time to make an offer. The offer, which your agent will help you craft, will include certain conditions that must be satisfied before the deal is complete, such as appraisal costs, home inspections, and final loan approval. If terms of the deal are approved by both parties, then a purchasing agreement is signed by you and the seller.
To apply for a new loan, you must give the lender accurate information about your employment, income, debts, assets, and financial history. Your loan agent will review your application and documentation.
If these satisfy the loan’s requirements, it’s time to order an appraisal of your house to determine its value and whether you have sufficient equity to support the loan.
Next, the underwriter (the key decision maker in the refinancing process) will closely evaluate all your documentation, your application, and your home’s appraisal to make sure you have the capacity to repay the loan. After reviewing your case, they will either ask for further documentation or will come to a decision.
If the underwriter approves your loan application, they will issue an approval letter along with conditions. The conditions will tell you what you must do before the loan can be processed. Read carefully through the approval letter to know the terms of the loan and exactly what is expected of you. The underwriter’s version does not always have the same terms as you applied for.
Loan docs will be sent to the attorney’s office or title company. In this big stack of paper will be the closing disclosure, which is essentially the final version of the loan estimate. It will tell you exactly how much you will pay.
After that, there will be a three-day review period that gives you the chance to review the closing disclosure and all the terms of the loan. If nothing big needs change in the the three-day period, you will be allowed a final walkthrough of the home 24 hours prior to signing the deal at the closing meeting.
Assuming all goes well, you got yourself a brand new home. Get the moving trucks ready!
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