I have so many people ask me "What's next?" I thought here might be a good place to post information so that you know what to do.
So you have searched and searched and wished and dreamed. Finally you have decided it is time to buy a home. Whether this is your first time, or one of many, the contracts have changed and the steps to get from here to closing seems daunting!! Maybe even a little scary!! Don't worry!! That is what I am here for!
1. The most important first step is to get pre-approved.
Perhaps you have a great relationship with a local bank. That may be your best option. I HIGHLY recommend that if your bank is a large bank, i.e. Chase, Wells Fargo, Bank of America, etc., that you stay clear of them. As good as they are at car loans and the convenience of a branch in every city, they are not good at the processing of home loans. They do purchase alot of loans after closing. So even though they may not be who you go through to get a loan, they may very well be who you make your payments to some day.
If you are a first time buyer, there are great loan programs out there. FHA, USDA and VA offer little to no money down, and you may qualify for down payment assistance. I would love to put you in contact with some lenders who do this VERY well and can taylor your loan type and fees based on your situation.
2. Let me help you find a home.
In todays world of internet options there are alot of search tools out there. Unfortunately, many of them provide outdated information. If you like searching on your own, allow me to provide you with apps to search from your phone. Also, the best source for real time information on your laptop or phone is REALTOR.com or Century21.com. They are refreshed every few minutes and gives you price changes in real time. I get calls and texts from clients who find homes on the other sites. Often they are already sold, or under contract. Those highly advertised sites you see on TV such as Zillow and Homes.com are the least accurate.
3. Let's make a deal!
You found THE house! Now is when the paperwork starts! It is important to remember that we are writing a contract. However, it is considered an offer, unless the Seller accepts your terms, which rarely happens. If the Seller counters your offer, the ball is back in your court. You can accept their counter, counter back or walk away. This back and forth happens until price and terms are agreed. The date which everyone is in agreement and everyone has signed and initialled is called the Execution Date. From this date all parts of the contract begin.
4. Option Time
Page 8 of the contract has what is called an Option Period. Most are for anywhere from 7-14 days. This is the time you get your inspection, contact several insurance companies for quotes and finalize your loan application by locking your rate.
Your Inspector needs time to schedule your inspection, so it is important to contact him as soon as possible. Items found on the inspection may need to be addressed by the Seller. We must notify them within the Option Period the items we want fixed. This is a 2nd negotiation. Some Sellers fix everything, some fix nothing. Others will fix the more important items.
You should get quotes from at least 2 or 3 different insurance carriers. Rates vary, and that great company you have had on the house in town might be the highest on a home in the country or vice versa.
Your lender needs you to contact them at this time to lock your rate. At this point you will be sent forms to sign online or overnight if you are not the tech type. These papers are very important that you sign and get them back to the lender ASAP. There will also be a checklist of items they need from you such as bank statements, pay stubs and tax returns. Don't pack these away. Keep all financial papers where you can easily get to them. You may need something sent to them more than once.
5. Now you wait....
This is the time after all the rush to find the house, make the offer, get the inspection, lock the rate, choose the insurance.... whew! Now what, you ask? Well, the lender is ordering the appraisal, I am ordering the survey, the termite inspection (if needed) and getting the signatures to the Amendment for the repairs the Seller has agreed to. The title company is doing the abstracting and preparing the preliminary commitment for title. The Lender may come back to you on several occasions and ask for more documentation. They are ordering Employment varification from your employer. They are ordering your tax returns from the IRS. It is very important that you respond quickly to any requests from the Lender. It could delay your closing.
There are several parts of the contract that have days... 3 days to review the commitment & survey, and on the Third Party Finance Addendum there is a section at the top stating how many days you have to get your underwriting approval. This is called a Conditional Underwriting approval. This basically means you have returned all the requested documents and have been reviewed by the underwriter. As long as there are no major changes to your job, your bank account, etc. the lender has approved you for the loan. Items that could change that are a job loss or the appraisal on the home comes in under the agreed price. Currently this is rare. During the recession, we had some fall out for that reason.
Very important: Do not buy a car, furniture or appliances without discussing it with your loan officer!!
6. Preparing to close.
Once the appraisal is complete we are typically finished with all the other items. As they prepare to close they will pull your credit at least once more. The process of preparing documents and working out final details between the lender and the title company used to take 24 to 72 hours. With the new RESPA laws you must review the loan final numbers 3 days prior to close, not including weekends. Be sure to respond quickly (again) so as not to delay closing. The Title company will schedule the closing with your lender. They are not open evenings or weekends, so be prepared to take time off of work.
7. Closing and funding.
At the scheduled time I will meet you at the Title Company for your closing. Bring with you a valid Drivers license and a Cashier's check for your balance (purchase price less loan amount plus all fees and less any Seller paid closing costs). Prepare to be there for anywhere from 30 to 90 minutes depending on the type of loan. When everyone has signed the documents are scanned and sent to the lender. If everything is satisfactory then the lender releases funds. The Seller, surveyor, termite inspector and Realtors are paid. If the Seller agreed to possession at closing and funding then you get keys!! If the Seller needed time to move after closing then you will receive keys once they have finished moving.
Congratulations!!
