This is Part 6 in a series of posts about how to tackle the home buying process.
1. Meet with a lender and get pre-qualified. Or, if you are ready to begin looking, skip to #2.
2. Select a specific loan program and get pre-approved. Make sure you have received your Good Faith Estimate and Truth-In-Lending Disclosure at this point. These documents disclose all of the lender fees and charges you will pay at closing.
3. Provide your lender with all requested documents. It is important to complete this step quickly! Click on the Homebuying Application Checklist to get an idea of the information you will need to provide.
4. Find a home within your pre-approval parameters and submit an offer.
5. Once your offer has been accepted, send your lender copy of the contract and discuss when to lock in your interest rate. “Locking in” secures your loan choice and interest rate.
6. Lender will order an appraisal of the home.
7. Lender will send the loan documents to be underwritten. This is the final review step.
8. The financing contingency will expire after the number of days specified in the contract (usually 30-45). At this time, your loan should be underwritten and approved, and your lender will provide you with a commitment letter stating the funds will be available at closing. You will also need to secure homeowners insurance at this time (this can be bundled through the same company that provides your car insurance).
9. Lender will send the loan documents to the title company a few days before closing. You should receive your HUD-1 statement and instructions on the amount of money to bring to closing at this time.
10. You will sign the loan documents at closing, and the prorated mortgage amount between the date of closing and the 1st of following month will be paid at closing. For example, if your closing is March 12, you will pay for March 12-April 1 at closing. Your next full payment will then be due May 1. This is because mortgage is paid in arrears, meaning what you pay on the 1st of each month applies to the previous month.
Note: During the loan process, it is very important to keep your finances in check. Don’t make any big or purchases (furniture, cars), open new credit cards, or change jobs. If you are accepting gift money from a family member, make sure it is in your bank account 1-2 months before you even apply for a loan.