Purchasing a Home

STEP TWO - Once you have created a budget the next step is to choose your mortgage lender.  It is best to start the mortgage process prior to the actual home search. This will keep you from looking at homes that you can not afford and save you time in the end. Too often people find a home and don't realize they can't afford it until it's too late. We have found some great options for you with our preffered lenders, but it's always a good idea to check with your personal bank because you usually get an extra discount when you have accounts with them. Don't have your credit pulled with every mortgage apllication unless it is within a week of each meeting. It is still a better practice to have a copy of your current credit score on hand. A mortgqge lender can review your report and give you a good idea of what would work best for you. Once a lender pulls your credit it is only good for around 120 days.

The Mortgage Broker or lender will require information and documentation to start the loan process. See the Mortgage Process for a more detailed explanation.  The Mortgage Professional will calculate the ratios and verify basic information so you can obtain a pre-approval letter. This pre-approval (or pre-qualification) will be needed to assist the agent with finding a property and submitting a purchase contract.

STEP FOUR - You found your home, so you will need to sign a contract. A contract is a legally binding document, which will state, among other things, the name of the seller(s), name of purchasers, the address of the property, the purchase price, the down payment, and what item(s) the seller has decided to include with the sale of the property. As part of the contract process, there will be negotiations regarding the terms of the contract, how much time the seller is prepared to wait for you to obtain a mortgage, on what date the contract will expire or the loan should close. Of course, there are many other conditions which the contract will contain, talk to your Realtor for more information.

For your protection, we recommend you have a professional help you through this difficult phase of the purchase. You may also wish to have an attorney review the contract before you sign it. Some states require that both the buyer(s) and the seller(s) have attorneys for a real estate transaction and some do not. Please discuss this with the Realtor.

STEP FIVE - After you have selected the property you wish to purchase, we highly recommend that you have a home inspection done on the property. The contract should indicate how much time will be allowed to complete the inspection. Sometimes you are allowed to have the inspection completed before you sign a purchase contract while some will allow it as part of the contract. Again, your Realtor will guide you through the process.
The home inspection will cost you, but a professional home inspector will point out any defects in the property and the applicable costs to remedy the problems found. The home inspector should put his findings in a written report. If your state requires an attorney to handle your contract you may wish to forward a copy of the report to the attorney. Your attorney may use the report as a basis for negotiating the purchase price with the seller’s attorney. If, on the other hand, you are not using an attorney then you will have to make your own decision regarding the purchase of the property, bearing in mind the contents of the home inspector’s report.

STEP SIX - Next, you will need mortgage financing (unless you are purchasing the property for cash). It is very important to shop around for financing because you will be making your mortgage payments for a very long time. There are several factors involved besides the interest rate. To give you an idea of how many mortgage types there are, take a look at the list here.
The Mortgage Broker or lender will require information and documentation to start the loan process. See the Mortgage Process for explanations on Application, Disclosures, Interest rate types (Fixed, Arm, Neg Am), Mortgage Insurance, Prepayment Penalties and even documents needed.

STEP SEVEN - Going to the closing table. Be prepared to sign a number of documents. This will be another stressful day in the home buying process. You will look at the stack sitting there and wonder what you are getting yourself into. Most of the forms are standard and often you will see duplicate forms. The Closing Agent, the Realtor and the Mortgage Broker will walk you through the process and answer any questions you may have.
After closing, the keys will be handed to you and you are now a proud homeowner. You will also receive a copy of all that paperwork you just signed. Please keep these documents in a safe place because you may need them at a later date. Your original title policy will arrive a few weeks later. This should also be added to the closing documents.
We hope this information was helpful in understanding what happens when you purchase a home. Please continue to browse our site for other helpful hints.