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Twenty (20) Steps to Home Ownership
Making your way through the real estate mortgage process is one of the major steps on the road to your dream house. Expect to complete the following steps before you’re ready to send out change-of-address forms:
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1) Prequalification
Lenders encourage home buyers to get pre-qualified for a mortgage before they begin house hunting, so that they know how much house they can afford. Because pre-qualification is only as good as the information you supply, it must be complete and accurate.
2) Loan search
Although buyers often get lender recommendations from real estate agents and friends, you may want to do some comparison shopping yourself. Among your choices are mortgage brokers, who have access to a wide variety of loans, or direct lenders, such as savings and loan companies, commercial banks or mortgage bankers. To speed up the process, it helps to start the search before settling on a particular house.
3) Escrow search
It is common for real estate agents to recommend companies they have had had experiences with. If you prefer to shop around, it’s best to start early.
4) The hunt
If it’s a “flat” market, you may have a bit more time to shop and compare, however, if it’s a “buyer’s market,” where there are more houses for sale than there are buyers, you may get an edge when your Realtor negotiates the deal.
5) Loan application
It’s crucial to give the lender as much information as possible, as accurately as possible. All outstanding debts as well as assets and income should be included. If you want a guaranteed interest rate, points or margin, ask for a written lock-in. (Download sample form at: www.StoneHomeTeam.com/forms)
6) Documentation
While “no-documentation” loans exist in today’s market, as well as other alternative-documentation programs, generally, borrowers will have to submit a variety of documents supporting the loan application, including everything from pay stubs or tax returns to divorce and child-support papers.
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7) Verification
The lender will verify your employment, income and down-payment deposit. At the same time, a credit report will be ordered and verified. If you lose your job during the loan process, you are required to notify your lender. If you don’t, the lender probably will find out anyway.
8) Appraisal
Lenders require an appraisal on all home sales. If the appraisal comes in low and the lender turns down the loan, the buyer either can renegotiate the sales price or increase the down payment.
9) Title Search
This is the time to discover if there are any liens or claims against the property, which must be settled or paid before the sale is completed.
10) Termite inspection
Most loans require an inspection for termite and water damage, and some problems may need to be repaired before finalizing the deal. It is common to include a provision in the sales contract for the seller to pay for repairs up to a pre-agreed limit.
11) Processor’s review
The lender’s loan processor is responsible for packaging all pertinent information and sending it to the loan underwriter.
12) Underwriter’s review
The underwriter makes the final decision on whether or not to grant the loan, based on all the information put together by the loan representative and the pro-cessor. Lenders are looking for borrowers who will make timely payments and for property that will cover the cost of the investment if the buyer defaults.
13) Mortgage insurance
Lenders may require private mortgage insurance if the borrowers put down less than 20 percent.
14) Loan approval
The lender agrees to lend the mortgage money when the borrowers and the house have met all the underwriting guidelines.
15) Hazard Insurance
In California, lenders require fire and hazard insurance on the replacement value of the structure.
16) Signing
Buyers sign final loan and escrow documents, usually at an escrow office.
17) Funding
The lender wires the funds for the full loan to the title company.
18) Close of escrow
The San Diego County Recorder records the documents transferring title to the new owners.
19) Confirmation of the recording
The title company authorizes the escrow company to the draft a check to the seller.
20) The move
Time to begin moving in the furniture and meeting the new neighbors.
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Copyright © 2005 - Joseph A. Tyson - Tyson Promotions - ClickSanDiegoRealEstate.com - All Rights Reserved
San Diego, California - Last Revision - 02 January 2005
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