Home Buying Process
The buying process is very important so please pay attention to these steps as it will help cause less frustration and will insure a smoother buying experience. When people get the wrong advice, it can turn the home buying process into a nightmare.
Step 1: Determine if you are ready
Yes, home ownership makes more financial sense than renting. However, it’s better to rent than to own more house than you can afford. Get your budget in order with a program like Mint to ensure your monthly cash flow is healthy.
Then make sure you have 10% saved for a down payment—20% if you want to avoid private mortgage insurance (PMI), which can run several hundred a month. Now for first time homebuyers, you can refer to the Down Payment Assistance tab to find out how you can buy a home with no or very little money down.
Step 2: Determine if your credit is ready
For every point your credit score is below 700 you’re going to pay more in interest. And while the difference between 5.9% and 6.9% may not seem like much, that one point will cost you about $35,000 on a $150,000 30-year fixed-rate mortgage. Make sure you know all the details about your credit report before you apply for a loan (because they will ask!) Call us today to run your credit report to see if you are ready to finance a home.
Your target should be 700 or above. Though you can buy a house with lesser credit, you won’t qualify for competitive mortgage rates. You can increase your credit score by paying off fixed-term loans, correcting any erroneous information, and reducing your credit card balances. If possible, don’t open or close any credit accounts two years prior to applying for a mortgage. We offer loan programs that accept as low as a 580 credit score but the terms will not be as attractive as a loan program qualified by someone who has above a 700 credit score.
Step 3: Get qualified
Historically, when buying a home, you would find a realtor and go look at homes for sale. If you saw a home you like, you would put an offer in and if the offer got accepted you would open escrow. Back in the days buyers would go through this process and then start working on the loan qualification. In today’s modern times, this is not the correct process or steps to take. The most important and very first step you should take is to get qualified before you go home shopping. In today’s market, sellers want to make sure that you are qualified before accepting your offer. Therefore it’s important to submit your information to make sure what purchase amount you qualify for, what monthly payment will be affordable for you, and what things you may need to fix or change in order to be fully qualified.
Step 4: Get a pre-approval
Ideally, you need to qualify for a loan that is affordable based on your monthly income and expenses. Your mortgage payment, including all insurance, taxes, and fees, should not exceed 30% of your take-home pay. Understand that local tax rates, condo fees, and whether you’ll need PMI will all eat away at how much house you can actually buy. We’ll walk you through the process to see what you do qualify for.
We’ll get you ready for the battle. Real estate agents will show you houses above your range and more than likely, you will be approved for a loan that is well above your range. Stick to how much house you can afford and you won’t live to regret it later!
Step 4: Go shop for a home!
Once you have you have a pre-approval from us, it’s time to go find your house! Only after you have your loan lined up should you go out and house hunt. Why? Sooner or later you’re going to fall in love with a house, and your real estate agent will be there to tell you that you deserve to live there, even if it’s way above your price range. Stick to your well-planned house buying strategy, and live wealthfully ever after.
Step 5: Close!
You provide us with documentation (bank statements, pay stubs, tax returns) of the information you submitted in your application. We’ll verify and approve your loan for closing. We’ll send a Notary Public to your home or office for you to sign the closing documents. Once signed, we’ll coordinate the loan closing and fund your loan. It’s just that simple!