The Basic Steps in Getting a Home Loan
It can be an exciting time when you are shopping for a home, but the process of obtaining a home loan can also be stressful. Understanding what to expect in the process can help you to be better prepared. There are several critical steps that are involved in the process from start to finish.
First, make sure you are pre-qualified. This is a crucial step that should not be overlooked. Pre-approval will give you an idea of how much you can qualify for in terms of buying a home. Pre-qualification; however, will let you know how much you can anticipate your monthly mortgage payment will be. In addition, you will have the peace of mind in knowing that you are actually qualified. Ideally, it is best not to begin shopping for a home until you have taken the time to become pre-qualified. This can help you to avoid disappointment in choosing a home that may be out of your price range.
After you have become
pre-qualified, the next step in the process is to make an offer on the home you would like to buy. This is done through a real estate agent in most cases. The real estate agent can also assist you with the process of locating a home if you have not already found one. In addition, they can help you with negotiating various terms of the sales contract. When you make an offer on the home, the sellers may choose to accept your offer, reject it or come back with a counter-offer. The process may take a few days depending on how much negotiating is involved.
After your offer on the home is accepted, the property will then be placed in escrow in many states. There are some states, such as Texas, where an earnest money deposit is made and the contract is received by the escrow office.
Once the contract is in escrow, you will then need to provide more detailed information to your home mortgage lender. You will also choose the type of home mortgage you would like and your interest rate will be locked in. This is an extremely important phase of the home mortgage loan process. You will need to provide documentation regarding your income and assets. The lender may also require other documentation as well. The process will move along much faster if you respond quickly to any requests the lender makes regarding documents.
The lender will then order the title along with a property appraisal after all of your information has been verified. Titles and appraisals are an important part of the home loan process. The appraisal provides a current market value for the home you are purchasing. The title company will perform a check regarding any current liens that may be on the home and ensure that all liens are paid so that there is a smooth transfer from the seller to you.
After all of the documentation for your home loan has been completed, the loan underwriter will then review the loan file in order to ensure the loan is completely qualified. In addition, the underwriter will also verify all asset and income documentation along with the appraisal and title. You may also have a home inspection performed at this time. After final approval for the loan has been provided, the transaction can then close.
At this point, the escrow office will then handle the preparation for transferring the assets according to the terms of the mortgage loan contract. This includes sending the loan documents to the title company. The title company will then prepare a statement that is known as a HUD-1 settlement statement. They will also collect funds from everyone involved in the transaction as well as place those funds in an escrow account.
The next step is one of the most exciting parts of purchasing a home. A time will be set for you to go to the escrow office in order to sign all of the various papers associated with the transaction.
After all of the relevant parties have signed the documents, the loan will then be funded. At this time the escrow company will send all of the paperwork as well as the mortgage deed to be recorded. The funds for the transaction will then be disbursed based on the information provided on the HUD-1 Settlement Page. The seller will then move out of the home and you can move in per the pre-arranged dance. You are now the owner of a new home.