Estimated reading time: 4 minutes
Buying a home contains numerous steps, each with their own attributes and requirements. To demystify the process, here’s a breakdown of the process and why each step is important. Remember, your process may vary slightly depending on if you start with pre-qualification or pre-approval—but we are here to help you every step along the way.
Being pre-qualified or pre-approved allows you, your attorney, and your Real Estate Agent to understand exactly what you can afford as you look for your new home. It also may make your offer on a home more appealing to the seller.
A Real Estate Agent can provide insight to the market and local trends far better than any internet search. If you’re buying a home out of state or you’re unsure where to start, our Loan Originators can give recommendations of Agents they work closely with and trust. Another great way to find a Real Estate Agent is to ask family and friends if they’ve worked with anyone before.
The most exciting step in the process, it’s time for house hunting! We recommend making a list of must-haves and could-live-withouts to bring along to home tours. Sending a copy of your list to your Real Estate Agent can also help them find suitable properties for you.
Once your offer is accepted and you’ve signed a contract, it’s time to make sure your application is finished. If you have a pre-qualification, you’ll need to provide all of your most current documentation so your application can be processed.
If you’re already pre-approved, your file will already have been through processing and underwriting—you will just be waiting for the appraisal report to be reviewed once it’s been completed.
Your underwriter will review all your documents, employment information, asset information, appraisal, credit, disclosures, and anything else required to establish whether your loan meets approval guidelines.
An appraisal is used to establish whether the property’s listing price is suitable based on its condition, location, and features in comparison to recent sales of similar properties. An appraisal protects the lender from providing more money than they might be able to recover in a worst-case scenario, such as a borrower defaulting on their mortgage.
Your attorney will submit a title report to the bank attorney for review. The title report is a written analysis of the property description, names of titleholders (those who own the property), how the title is held, the tax rate, encumbrances (deeds of trust, recorded judgements, and the mortgage), and property taxes that will be due when the title is transferred.
Title insurance protects you and the mortgage lender if any possible issues arise over the ownership of the property. It’s a one-time payment that is paid at closing and covers certain legal costs of a title dispute, depending on the selected policy.
A lender’s conditional approval includes a list of the conditions that must be satisfied before you can close on a loan. Conditions vary among lenders and loan types but may include additional proof of income, assets, and property. All conditions must be met before you can move to closing.
You will then submit all conditions noted on commitment letter for final closing clearance. A copy of your commitment letter is sent to your Real Estate Agent and attorney.
Once everything is verified, your closing date will be coordinated amongst both parties’ attorneys.
The final step to the homebuying process, closing typically includes finalizing the details of your home loan, including signing all loan documents. After closing, you can begin making your move official by alerting necessary individuals and companies of your change of address!
Buying a house can be overwhelming if you’re facing it alone, but that’s why Homestead Funding is there for you every step of the way. When you’re ready to get started, contact us. Our experienced Loan Originators will walk you through and answer any questions you have along the way, whether in person or online through our mobile app.
Homestead Funding offers exceptional customer service and a convenient mortgage process. Whatever your financing needs, our goal is to exceed your expectations.