Step 1 in purchasing a home is getting pre-approved by a lender
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The best time to get pre-approved for a mortgage is 6 to 12 months before you actually purchase. As a home buyer, pre-approvals are for your benefit, so it's never too early to get one. Be aware, a pre-approval is not a guarantee for receiving an actual mortgage.
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Once your offer is accepted, it comes time to make sure the house is a sound investment and that you can get a mortgage that works for you. During this stage, you'd work with your loan officer and real estate agent to work through your mortgage application, appraisal and inspection
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When applying for a mortgage, the borrower needs to submit a loan application to the lender. Your loan application includes everything that will help determine whether or not you qualify for a mortgage using this property as collateral. This process is called underwriting. I will obviously help you with this step.
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The Closing Disclosure is a five-page form that you receive from the lender. It describes the critical aspects of your mortgage loan, including purchase price, loan fees, interest rate, estimated real estate taxes, insurance, closing costs and other expenses. It’s the last step before settlement.
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Closing is when you wrap up the home buying process at the Title Company. Transfer of the property title and receipt of payment for the property are both handled on closing day.
Pre-qualified or Pre-approved?
Prequalified means a lender gives you a rough estimate of what amount you could potentially get for a loan. However, there is no credit check involved and there’s no financial due diligence review. In order to be considered a serious buyer by the listing agent, the seller, and by your own realtor, you need to be pre-approved, not pre-qualified.
In order to get pre-approved, a lender needs to know how much money comes in every month, what assets you have, what your monthly liabilities are (like credit cards, car loans, etc), what your credit history and score is, and how much cash you want to put down. Only that way the lender can make an estimation of your ability to repay for a loan.
After you have found your dream home and the seller has excepted your offer, you go ‘under contract’. This is the time we will work on getting you the official approval from the lender based on the home that will be used as collateral.
What we’ll do is check your credit (FICO score) and that of the co-borrower if applicable. Together with an overview of your monthly income, assets, liabilities, and down-payment, we can get you pre-approved for a certain amount. This will give you the confidence to look for a home without any worry about your ability to repay the mortgage.