The Home Buying Journey
Preliminary Conversation
At this point, you have probably been thinking about buying a home for a while and are ready to learn more. Start the process by reaching out to me and having a conversation. We’ll discuss your current situation and what you are thinking about buying. I will ask you some questions regarding your income, assets and liabilities. Then, based off the information you give me, I will tell you what you would qualify for, the amount of money you will need for down payment and closing costs, and what your monthly mortgage payment would be. In addition, I’ll talk you through the process of buying your home. After we speak, you’ll go visit some open houses to get a sense of the market and what type of home you can afford. If you’re happy with what you see, you’ll start the formal process.
Pre-Approval Letter
You’ve decided you’re ready and willing to take the first step forward on your path to homeownership. You’ll fill out a loan application on-line and upload some documents, including a copy of your identification, pay stubs from the last two months, W-2 forms for the last two years, and bank and investment account statements. In addition you’ll give permission for me to check your credit. This point in the process is one of the ways I differ from my competition. This process is free for you, I don’t charge to run your credit. Secondly, I will do a “soft-pull” of your credit so that it does not affect your credit score. I’ll have a full underwrite of your credit profile and provide you with a pre-approval letter that you can show prospective real estate agents and people selling their home.
Find a Real Estate Agent
Finding a good real estate agent is a critical step in the process. Don’t just go with the first one you meet. Ask friends and family for recommendations. When you find one you like, ask the agent how long they’ve been in the business, how much volume they do, and specific questions about the neighborhoods you are considering. Make sure you are comfortable with the person before you start shopping. A good agent will provide you with a wealth of information about the market, the home shopping process, and help you make a good offer when you find your dream home.
If you are in Austin, Texas then I want to be your real estate agent. I always put my clients needs and interests first and work tirelessly to help them find their dream home. If you are not in Austin, Texas and need help finding an agent, please reach out to me and I can refer one for you.
Go Shopping
This stage of the process can be as short as a couple weeks or take several months. For many home buyers, this can be a stressful part of the process. Working closely with your real estate agent, you will visit potential homes. When you find one you like, you will make an offer. If you are lucky, they will accept your offer. If not, you will try again and might have to repeat the process a few times until you have an offer accepted. As soon as your offer gets accepted, reach back out to me to get the mortgage started.
Loan Estimate
After providing additional information on the property, I will send you a loan estimate based on current market conditions. All costs associated with your mortgage will be broken down in detail in the formal three-page loan estimate. After you have had a chance to look it over and ask any questions you may have, when you have decided to go forward with it you will signal an intent to proceed. This is an important part of the mortgage process, because as soon as you let me know that you intend to go forward with the mortgage, several things get started behind the scenes. First, I will lock in the rate on your mortgage. Secondly, we will order the appraisal on the property if needed. This is the one cost associated with your mortgage that you pay for up front. We order the appraisal as soon as possible to avoid any potential delays in closing associated with the appraisal.
Loan Processing and Underwriting
I will enter all required information for the mortgage and upload all necessary documents to the file. After I have everything I need for the mortgage, I will submit your mortgage to the underwriter for review. The underwriter is like the eyes and ears of the lender. They go through the file with great detail, examining documents and cross referencing data entered in the loan origination system. It is common for them to find something and send the file back to me with what’s called a condition. An example of a condition might be an unexplained large deposit in the bank account of the borrower a month prior to applying for the mortgage. After discussion with the borrower, it’s learned that the deposit was a gift from the borrower’s parents to help with the down payment. The borrower’s parents would have to complete a gift letter confirming it was a gift and not another loan. Then the file would get resubmitted to the underwriter. If the underwriter was satisfied, then they would mark the loan “clear-to-close”. When you learn your loan is “clear-to-close”, you should have a celebratory dinner because that means the only thing left to do is pick the date and time of the closing.
Closing Disclosure
I will send you a Closing Disclosure at least three days prior to closing. It is a five page document that looks similar to the Loan Estimate. The costs associated with your mortgage and purchasing of your home are broken down and even separated between borrower-paid and seller-paid. We will schedule the closing. On the day of closing, I will handle wiring the funds to the title company. When you arrive, there are a series of documents that you will sign. You should be in and out within thirty minutes. You will walk out of there a home owner!