The Home Buying Process

There are a number of basic steps that can make the process for a prospective home buyer a much easier and stress free course of action.  These steps may be fairly intuitive or common knowledge for experienced homebuyers and perhaps more fruitful for those who are not as seasoned in the home loan and home buying process.

Before a consumer begins the house hunting process, step one should be to become prequalified for a home loan.  The perfect starting point for that task is the mortgage calculators.  The preapproval is a conditional commitment by a lender to make a loan prior to the identification of the specific property.  The mortgage payment calculator and the mortgage qualification calculator will help to identify how large a loan a potential borrower may qualify for.  Once the loan amount, monthly mortgage payment and down payment are calculated with the mortgage calculators and the buyer is happy with the results the next step is to obtain a preapproval from a mortgage lender or bank.  The preapproval is not a necessary step; however the difference with the preapproval is that it avoids user errors that might have occurred regarding entering the data in the mortgage calculator and solidifies the credit worthiness of the buyer.  With the preapproval from a local bank or mortgage company the actual financials, income documents and the credit profile are analyzed by the mortgage loan underwriters. 

Now that a prospective buyer has identified the price of a home they can afford, it is time to go shopping and find the right home.  To start, determine your own needs and discuss home options with family members who will be living in the house and friends who may have insight into the process.  Construct a list of features you believe are important and even include items that may be questionable as to their necessity.  This practice help buyers avoid getting in over the head with a house that has expensive bells and whistles that are unnecessary and possibly regretful once those monthly mortgage payments become a burden instead of a joy.

Select a reputable professional, who listens to your needs, is knowledgeable about the market and with whom you feel comfortable with to help find a home to purchase.  Research homes, drive by homes, go to open houses and do it all over again.  The more data and knowledge the less likely a buyer will regret their decision.  Consider the types of homes, whether they are new or an existing home, examine the condition of the home, consider the various features of the home, study the location and surrounding area, consider the economic stability of area and don’t forget to look at other cost aspects of the home such as utility costs, maintenance and property taxes.

Soon it is time to finalize the selection and make an offer.   The real estate agent who represents you presents your offer to the seller.  It will be either accepted, countered or rejected.  Do not be disheartened if the offer is rejected by the seller.  It is not uncommon for the seller to make a counter offer.  When a price for the home is settled upon, you and the seller sign a purchase agreement.  This agreement defines the terms and conditions of the sale.  The contract is signed and signifies that both the seller and buyer have agreed to purchase the property under the negotiated and agreed terms and price.

After the contract is agreed is to, the buyer should have a home inspection completed.  Most purchase contracts contain provisions for a home inspection to be performed within a certain timeframe, and sometimes they specify what action the buyer and seller may take if problems are uncovered.  Purchasing a home is likely the largest investment in someone’s life and they should know as much as possible about they are buying.  Hire a professional home inspector after the offer has been accepted.  A good home inspection provides an in-depth look at the basic systems of the house to reveal any safety hazards and give you a chance to reconsider the deal..

Finalize the mortgage loan process and selection.  Lock in the mortgage interest rate if desired and clear any remaining conditions for the loan closing.  At this time, the applicant may have to sign the formal mortgage application and provide additional or updated income and asset documentation from the time of the preapproval.  An appraisal, usually required by your mortgage lender, will be performed by the mortgage lender to ascertain the home’s value.  All outstanding loan conditions will be submitted by a loan processor so the loan can be approved by the underwriter and the loan closing can be established.

The final step it to close on your new home purchase.  Closing day is the day the homebuyer and the seller complete the legal transfer of the house.  At the loan closing, a closing agent coordinates and distributes all the paperwork and fund according to the terms agreed upon.
Ownership of the property will be transferred at the conclusion and you become the proud owner of your new home. Once the closing process has been completed, the keys to the house are given to the buyer.

Using the mortgage calculators and following these steps can make a potential homeowner a more knowledgeable buyer and achieve a stronger bargaining position with sellers and mortgage lenders.  A little more knowledge in the home buying and lending arena may help a prospective homeowner avoid hassles and mistakes along the way while making the transaction more profitable.

This entry was posted on Wednesday, December 17th, 2008 at 5:57 pm and is filed under Mortgage Basics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.