WHAT IS THE PURCHASE PROCESS? WHERE DO YOU START?
1) Reach out to a lender/mortgage company and request a loan pre-approval • Besides finding a home, this may be the most important part of the loan process. It’s critical that you get a green light from your loan officer. Also, although some lenders don’t require loan documents to issue a pre-approval, we suggest that you provide your loan documents to the loan officer right away. For a list of the required loan documents please see our Loan Documents Page.
During the pre-approval process, it’s important to fully explain your financial situation to the loan officer. Making sure everything is properly disclosed will speed up the loan process and help avoid any late minute snags that may delay a closing. Typical questions to cover during the pre-approval process are:
What’s the max purchase price I can qualify for? How much money down do I need? Am I paying for closing costs? What is my interest rate? When can I lock my loan? Which programs do I quality for based on my situation? What is the maximum mortgage payment I qualify for?
2) Pick a Real Estate Agent to assist you with your purchase • Once you pick a real estate agent, plase pass your lender’s information to them to make sure everyone is on the same page and there is no miscommunication.
3) Find a home/go under contract • Once you find a home that you love, your real estate agent will send an offer to the seller. The offer can vary depending on your situation but in some cases, you might request the seller to pay for your closing costs. You might also request that the seller fix a certain item in the home. Communication between the homebuyer, the real estate agent and loan officer is crucial in this step of the process.
4) Final loan approval • Assuming that your lender already has most of your loan documents, at this point, you will order an appraisal on the property and submit final loan documents to underwriting. It’s important that the appraised value of the home is not lower than the purchase price. Mortgage companies/banks will only lend up to the appraised value! If the purchase price exceeds the appraised value, the buyer will be responsible to cover the difference or the seller will need to lower the price.
5) Closing • Once you’re under contract, typically you can expect to close on your loan and move into your new home within 30 days. Some loan programs may require a little bit longer.
What’s The Difference Between a Pre-Qualification, a Pre-Approval And a Conditional Approval?
A pre-qualification just means someone has glanced at your credit and income and has determined that you’re able to purchase. Unfortunately, this is not always good enough so we encourage everyone to get pre-approved.
A pre-approved loan is one that has been run through automated underwriting and has been issued an approval through Fannie Mae, Freddie Mac or FHA. In certain situations, It’s also important that the loan officer takes a look at your most recent paystubs to make sure that your income has been properly calculated.
CONDITIONAL LOAN APPROVAL
A conditional loan approval means the loan has been reviewed by an underwriter and an actual written approval has been issued. The approval will be pending until the applicant goes under contact. Once under contact, the loan approval will be contingent upon completion of an appraisal and some other basic documentation such as updated paystubs. A conditional loan approval can be extremely helpful when house hunting because the homebuyer can close on their home faster and also alleviate unnecessary stress. A conditional loan approval will also help when making an offer on a home because a listing agent will be more inclined to accept an offer from a buyer who already has a loan in place.