Pre-approval -
Get pre-approved for a mortgage and know in advance exactly how much house you
can afford. Completing this step will also increase your negotiating power since
you'll be viewed as a "cash buyer". The pre–approval letter gives you a
competitive advantage against other buyers who have simply been pre–qualified
for a loan. Sellers are more likely to accept your offer on their home because
you have been guaranteed a loan. Plus, it can also speed up the closing
process. During the pre–approval process we’ll determine how much money you are
eligible to borrow by reviewing debt, income and savings information.
Loan Search - Put yourself in the hands
of an experienced mortgage professional, someone who will help you to determine
which financing options best suit your needs today and in the future.
Loan Application
- It's crucial to supply
the lender with as much information as possible, as accurately as possible. All
outstanding debts as well as assets and income should be included.
Home Loan Documentation
- Paperwork supporting the
application must also be submitted. Information commonly sought includes pay
stubs, two years' tax returns, and account statements verifying the source of
the down payment, funds to close and reserves.
The Hunt - Begin shopping for a
house. Once you find the right one, the terms of the sale will be negotiated,
including the price and potentially the terms of the loan being sought.
Appraisal - Lenders require an
appraisal on all home sales. By knowing the true value of the home, the borrower
is protected from overpaying.
Title Search - This is the time when any
liens against the property are discovered. A lien may have been placed on a
property to ensure payment of outstanding debts by the owner. All liens must be
cleared before a transaction can be completed.
Termite Inspection - While most purchase
loans do not require a formal inspection for termite and water damage, some
loans (especially government loans) allow for the possibility. If problems are
found, repairs may be necessary.
Processor's Review - All pertinent
information will be packaged by your mortgage professional and sent to the
lending underwriter, including any explanations that may be needed, such as
reasons for derogatory credit.
Underwriter's Review - Based on the
information put together by the loan professional, the underwriter makes the
final decision regarding whether a loan is approved.
Mortgage Insurance - Many lenders
require private mortgage insurance when borrowers put down less than 20 percent
on a loan.
Approval, Denial or Counter Offer -
In order to approve a loan, the lender may ask the borrowers to put more money
down to improve the debt-to-income ratio. The borrower may also need a bigger
down payment if the property appraises for less than the purchase price.
Insurance - Lenders require fire and
hazard insurance on the replacement value of the structure. Flood insurance will
also be required if the property is located in a flood zone. In California, some
lenders require earthquake insurance on condominiums.
