Home Buying Basics Advice To First Time Home Buyers
This BLOG On Home Buying Basics For First Time Home Buyers Was Written By Gustan Cho NMLS 873293 Of Natiowide Mortgage & Realty LLC
The more first time home buyers are familiar and educated on the home buying basics, the less stressful the mortgage process will be. The pre-approval stage of the mortgage process is the most important phase of the overall home buying process and the main reason for a last minute loan denial and delays in the closing process is due to the loan officer not properly qualifying borrowers. Over 75% of borrowers of The Gustan Cho Team at Nationwide Mortgage & Realty LLC are folks who either got denied or are going through a stressful mortgage process with their original lender. Other borrowers are those who keep on getting their clear to close delayed. Again, these reasons are due to the mortgage loan originator not properly qualifying borrowers. The more knowledgeable and confident a home buyer is, the overall mortgage process will not just go smoothly but the home loan will close on time.
The Home Shopping Process
- How Much House Can I Afford: Remember that the mortgage payment is not the only factor involved when making monthly payments on your home loan. You need to take account insurance, taxes, and private mortgage insurance, if applicable. You need to decided on how much you are able to afford on your new home. Keep in mind up-front expenses such as closing costs when you are calculating what you can spend. Use the online calculators at www.gustancho.com to determine how much house you can afford.
- Loan Program: When consulting with a mortgage loan originator, the loan officer will go over the best loan program suited for your home purchase needs. FHA Loans are best for home buyers who have higher debt to income ratio, lower credit scores, outstanding collections and charge offs, and other credit/income issues.
- Choosing A Loan Officer: Pre-Approval is the most important phase of the mortgage loan process. You need to get along with your loan officer and make sure they are available and return their phone calls and emails promptly. Pre-qualification letters are non-existent and sellers and seller’s real estate agents expect a solid pre-approval letter from a reputable mortgage lender. Most borrowers will do a national online search on the loan officer that is recommended to them and check for both positive and negative reviews. A large percentage of listing real estate agents will call and interview the loan officer to make sure that the home buyer has a solid pre-approval and not just a mere pre-qualfication.
- Shopping For A Home: Once that you know you have a solid pre-approval and know what price range home that will suit your budget and be able to afford, it is now time to start the home shopping process. Again, hiring a real estate agent that home buyers get along with is one of the most important decisions buyers will need to make. Home buyers can see one or two homes or may end up visiting dozens of homes to find that home of their dreams.
- Neighborhood & Area: Location is one of the most important factors that home buyers need to decide. A home in one area may be twice as expensive for a similar home in another neighborhood. Property taxes vary depending on location and neighborhood. School districts, distance to major expressways, distance to shopping, and the commute to work should be important factors home buyers need to take into consideration.
Real Estate Purchase Offer
- Entering Into A Purchase Offer: After finding a home, it is time to give the home seller a purchase offer. The purchase offer includes the offer price, closing date, the amount of earnest money, and contingencies. Contingencies includes home inspection period, loan commitment date, appraisal contingency, and sellers concessions requested by home sellers. Home sellers may come back with a counteroffer such as a higher price and other counters like reduced sellers concessions and elimination of certain contingencies as well as higher earnest money deposit. Sellers also may counter with no repairs done to the home and a faster closing date.
- Mortgage Loan Process: After the sellers and buyers have agreed on a mutual agreed purchase contract, the buyer will submit the real estate home purchase offer to the loan officer and the mortgage process starts. The buyer’s loan officer will have most of the borrower’s information like bank statements, paycheck stubs, credit reports, tax returns and other necessary mortgage documents so getting the executed purchase contract should be the only item needed to start the mortgage process. The Gustan Cho Team at Nationwide Mortgage & Realty LLC normally closes most loans in 21 days or less.
- Clear To Close And Closing: Once the borrower gets a clear to close, the closing department of the mortgage lender prepares closing docs and the title company arranges the closing date and time. At closing, docs are signed and funds by the lender is wired to the title company. Sellers gets proceeds and buyer gets keys. Title company records title and completes all necessary paperwork for both buyers side and sellers side.
- Walk through: The final home inspection is called the walk through and is done a day or two prior to closing. All necessary repairs promised is inspected and if it is not, then both buyers and sellers renegotiate on the terms of the real estate purchase contract. Things to check for during the final walk through is to see that the house is clean and ready for the home buyers to move in and all necessary repairs that were promised is made. If the home buyer feels that things on the original purchase contract is not met, this is the time to speak up and renegotiate the terms. If they are minor issues, then the sellers usually offers a cash settlement or the sellers may decide to go ahead and make the necessary repairs. Closing date may potentially get delayed if repairs to be made take longer than expectd. This is the main reason why the walk through should not be done the same day of the closing.
Please contact us if you have any questions or need a referral for a realtor in your area.
Gustan Cho NMLS ID 873293
2017 UPDATE On This BLOG On Home Buying Basics
This Article On Home Buying Basics was updated on March 16, 2017 By Gustan Cho NMLS 873293 of The Gustan Cho Team at Nationwide Mortgage & Realty LLC.