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1. |
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Pre-approval - Get
pre-approved for a mortgage and know in advance exactly
how much house you can afford. Completing this step will
also increase your negotiating power since you'll be
viewed as a "cash buyer". |
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| 2. |
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Loan
Search - Put yourself in the hands of an experienced
mortgage professional, someone who will help you to
determine which financing options best suit your needs
today and in the future. |
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| 3. |
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Loan
Application - It's crucial to supply the lender with
as much information as possible, as accurately as
possible. All outstanding debts as well as assets and
income should be included. |
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| 4. |
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Documentation - Paperwork supporting the application
must also be submitted. Information commonly sought
includes pay stubs, two years' tax returns, and account
statements verifying the source of the down payment,
funds to close and reserves. |
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| 5. |
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The Hunt
- Begin shopping for a house. Once you find the
right one, the terms of the sale will be negotiated,
including the price and potentially the terms of the
loan being sought. |
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| 6. |
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Appraisal - Lenders require an appraisal on all home
sales. By knowing the true value of the home, the
borrower is protected from overpaying. |
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| 7. |
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Title
Search - This is the time when any liens against the
property are discovered. A lien may have been placed on
a property to ensure payment of outstanding debts by the
owner. All liens must be cleared before a transaction
can be completed. |
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| 8. |
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Termite
Inspection - While most purchase loans do not
require a formal inspection for termite and water
damage, some loans (especially government loans) allow
for the possibility. If problems are found, repairs may
be necessary. |
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| 9. |
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Processor's Review - All pertinent information will
be packaged by your mortgage professional and sent to
the lending underwriter, including any explanations that
may be needed, such as reasons for derogatory credit. |
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| 10. |
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Underwriter's Review - Based on the information put
together by the loan professional, the underwriter makes
the final decision regarding whether a loan is approved. |
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| 11. |
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Mortgage
Insurance - Many lenders require private mortgage
insurance when borrowers put down less than 20 percent
on a loan. |
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| 12. |
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Approval, Denial or Counter Offer - In order to
approve a loan, the lender may ask the borrowers to put
more money down to improve the debt-to-income ratio. The
borrower may also need a bigger down payment if the
property appraises for less than the purchase price. |
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| 13. |
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Insurance - Lenders require fire and hazard
insurance on the replacement value of the structure.
Flood insurance will also be required if the property is
located in a flood zone. In California, some lenders
require earthquake insurance on condominiums. |
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| 14. |
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Signing
- During this step, final loan and escrow documents
are signed. |
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| 15. |
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Funding
- At this point, the lender will send a wire or
check for the amount of the loan to the title company. |
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| 16. |
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Confirmation of Funding - The lender authorizes the
disbursement of loan proceeds. |
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| 17. |
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Closing
- Documents transferring title will now be
officially recorded by the County Recorder. |
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| 18. |
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Congratulations, you are now a homeowner! |
