Seven Steps to Financing Your Home
Step 1: Qualifying
You will know you've found the perfect home when you see it. But, before you start shopping for your dream home, it's a good idea to determine how much you can afford to borrow. Use our Mortgage Calculator to help you determine the mortgage amount for which you could qualify.
Step 2: Finding the Perfect Home
Once you know how much you can afford, you're ready to find your home. When searching for a house, it's good practice to make a list of those factors that are important to you, such as location, size, number of bedrooms and bathrooms, design upgrades, homebuilder reputation and proximity to your job. You should then rank those items in order of importance. Once you've found the perfect home, you'll also want to make sure your community and surrounding area meets your needs and fits your lifestyle. Does the neighborhood offer recreational amenities (swimming pool, fitness center, golf course, etc.) that support your quality of life? What about the quality of the local medical facilities, quality of the school system, access to airports and public transportation, cultural events, parks and places of worship? If you're considering an out-of-state relocation, you may also want to research unseen cost-of-living increases, such as utility prices, car insurance rates and property taxes.
Step 3: Applying for a Loan
To start what is perhaps the most important part of the loan process, you'll need to complete a loan application, which consists of questions about yourself and the property you are interested in buying, as well as some basic questions about your employment, finances, income, assets and liabilities. Prior to completing your loan application, you will need to determine the amount of down payment you will be making towards your new home. The following documents should be brought with you when you fill out the loan application:
* Most recent paycheck stubs covering the most recent thirty-day period. * W-2s and/or 1099s from the most recent two years. * Two months of the most current and consecutive bank/investment/retirement statements for all of your accounts.
If self-employed, you will need to bring in the most recent two years' tax returns and copies of 1040s, W-2s, 1099s and/or K-1 for each borrower. You will also need a year-to-date profit and loss statement.
Step 4: Selecting a Loan Program & Locking-in an Interest Rate
There are a number of factors to consider when determining which loan program is best for you, such as the relationship between interest rates and points, the length of time you plan to stay in the home, your financial status and your credit history. The good news is that experienced loan specialists are trained to ask the right questions and help you evaluate these factors. They will work with you to sort out the financial details and select the right loan program for your needs. As you negotiate numbers with your mortgage representative, remember you'll also need enough cash for the down payment and closing costs.
At some time between loan application and closing, you will need to lock in your interest rate. To do this, you must simply contact your mortgage representative. Your mortgage representative will tell you what the rate for your specific loan program is at that time. Keep in mind that interest rates can change at any time and without notice. Rates generally change a little bit each day or several times a day.
Step 5: Loan Processing
Your personal loan officer will send you a package of documents in duplicate that will provide you with information about the loan for which you have applied, along with a list of documents required for your application to be complete. Your loan officer can answer any questions you may have, and he or she will work with you to complete all necessary paperwork. You will then sign the documents in the package and return the lender's copies, along with any additional documentation that has been requested.
Step 6: Approval and Clearing to Close
Once your documentation has been reviewed and approved, you will be issued a mortgage commitment letter. Your mortgage company's closing department will review certain legal documents, such as an appraisal and title report for your new home, and you will be ready to close. Your closer will contact you and/or your attorney to schedule a closing date.
Step 7: Closing
You are almost home! The closing, the most crucial and most exciting step in the mortgage process, is the part where legal documents are signed and substantial amounts of money exchange hands. Saussy Burbank and your closing agent will coordinate a firm closing date and time with you. The closing is usually held at an approved settlement agent office, usually a title company or attorney's office. Your mortgage representative will provide you with the amount you will need to bring to closing.
As your closing date approaches, remember that:
* Money needed for closing must be in certified funds unless otherwise instructed by the attorney's office. * A picture I.D., such as your driver's license, must be brought to closing. * Homeowner's insurance must be in effect on the day of closing.
Buying a home can be an easy process if you are prepared. Plan ahead, work with a reputable lender and ask the advice of your loan consultant whenever you're in doubt.
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