The Home Purchase Process

Step 1 – Get your documents in order!

  • 2 years of W-2s and 1 month of all paystubs or if self-employed, provide 2 years of tax returns with all schedules attached.
  • 2 months of statements for each bank, stock, mutual fund account, and 401k where you maintain accounts.
  • If you own rental property, provide all rental contracts, leases or agreements and 2 years of tax returns, including Schedule E.
  • If divorced, provide a copy of the divorce decree and property settlement agreement if any.
  • For the complete “Needs List” click here

Step 2 – Get Qualified

Before you apply for a loan, you can get prequalified so you have an understanding of how much you can borrow.

Based on the information you provide either verbally or in writing, your mortgage professional will review your request and determine the dollar amount you can be approved for. You will then receive a pre-qualification letter to give to use in your home buying process.  However, the mortgage professional does not make the final approval, therefore a pre-qualification is not a commitment to loan.

When making an offer on a property, a pre-qualification letter is generally submitted to the sellers along with the offer to demonstrate that you are qualified to purchase the home you are offering on.

A pre-approval is more involved and means verifying your credit score, funds for a down payment, 2 years of employment history, and so on. Your home loan application is submitted to underwriting where a decision is made regarding your loan. If your loan is pre-approved, you are then issued a pre-approval certificate.

A pre-approval can help you close faster and be used as leverage in the contract negotiations. It may even help you get a better price because it is close to having cash in the bank. We highly recommend getting pre-approved before you start house shopping.

Step 3 – Shop Loan Programs and Rates

If you have an understanding of how long you plan to keep the property, it can influence what type of loan product and term will fit your needs.

Understand the relationship between rates and points.

One point is equal to 1% of the loan amount. The more points you pay, the lower the rate will get. Consult your tax advisor for applicable tax deductions.

Compare different programs.

This can become confusing and difficult because there are so many different programs to choose from. This is why it’s important to speak with an experienced mortgage specialist who will help you make the best decision for your situation.

Step 4 – Obtaining Loan Approval

Whether you are getting pre-approved or you are in contract, the loan application must be completed. Now the loan approval process starts by:

  • Pulling your credit scores
  • Employment verification
  • Property appraisal
  • Verifying all of your assets

Tips for getting a faster loan approval!

  • Respond immediately to any requests for documents. Sometimes documents can spur the need for additional explanation or new documents. Timing is critical, especially if your rate is locked or if you are under contract to do so by a certain date.
  • Complete your loan application fully.
  • Pay all of your bills on time.
  • Do not purchase anything major or on credit until your loan is funded. Any changes to your credit and assets can adversely affect your credit score or change your application in some way.
  • Make sure any money transfers into or out of your account can be traced and explained.
  • For a more complete list of dos and don’ts click here.

Step 5 – Closing of Your Loan

Now that are in contract for the home you want and your loan is approved, you will need attend your closing with the title company.  Here, you will sign your loan documents and final disclosures. You will need to bring a cashiers check for the payment of closing costs and down payment. Be sure to review the final disclosures and ask any questions that you may have. Check the terms, the interest rate, make sure everything is spelled correctly and the address of the property is accurate. If refinancing or receiving a home equity loan, federal law requires you are given a 3 day right of rescission before your loan transaction is officially closed.