Buying a home? Things you should know.
Buying a home can be both exciting and confusing. There are many decisions to be made in finding the right home for you. Each must be carefully considered to ensure you will be happy with your purchase for years to come. The whole process can seem overwhelming at times. Relax – we’re here to help.
To begin the home buying process, get pre-approved for a mortgage loan.
During the pre-approval process, your income, job history, credit history, current debt obligations and assets will be evaluated to determine if you qualify for a mortgage loan. You will learn how much you can borrow and what the monthly payment would be. You don’t have to borrow the maximum amount for which you qualify for, but it certainly helps to know what this limit is before you start looking for a home.
From this point on, keep all future pay stubs, bank account statements, investment and retirement account statements in an envelope or folder for when the time comes to make a formal loan application.
There is never an application fee at First Nations and we never charge an upfront credit report fee.
Once you have been pre-approved, find a licensed real estate professional to work with.
We strongly suggest to our clients that they use the services of an experienced real estate professional under a Buyer’s Agency Agreement. This contract insures that they work for you and not the seller. Without this agreement, licensed real estate agents must work on the seller’s behalf as a “sub-agent” of the seller’s listing agency. If the house you find is listed through a real estate company, the seller, in most cases, is obligated to pay your Buyer’s Agent’s fees for you!
What if you want to look at a house listed “For Sale By Owner”? Simply call your agent and tell her where the house is and most often, she can call the seller and get them to agree to pay her fee.
Now comes the fun part –finding the home that’s right for you!
First you want to talk with your agent and discuss what you’re looking for. In addition to the number of bedrooms and baths, this can include location, school districts and neighborhood amenities. Making a “wish list” before beginning the process will help.
Once you find the home that’s right for you, your buyer’s agent will provide assistance in negotiating the most favorable price and terms for you. They can provide information regarding recent selling prices for comparable homes in the neighborhood so you won’t overpay. This is very important.
Lenders base the loan amount on either the selling price stated in the sales contract or the appraised value of the property – whichever is less. If the property does not appraise for the contract price, you can still get a loan but you will have to increase your down payment to include the difference between the contract price and the appraised value.
While you are entitled to a refund of your earnest money deposit if the house does not appraise for the selling price, you will lose the cost of the appraisal and any inspection fees you may have to make up to that time.
You found your dream home and are ready to make an offer.
It is important to remember to call us before you make the offer. We can assist you in determining how to best structure your offer to minimize your cash out of pocket expenses. You may want to submit your offer having the seller pay part of your closing costs. We will also determine if there are any special financing options available for the home and what documents may have to executed at the same time you sign the purchase contract, such as the FHA addendum to the contract.
At this time we can provide a pre-approval letter for your agent to give to the seller’s representative with your offer. When your agent includes this letter with your offer, the offer has much more credibility over a possibly higher competing offer from another buyer who is not yet pre-approved.
Hurray!! Your offer has been accepted. Now what?
Call us immediately to schedule an appointment for a loan application and send a copy of the purchase contract to us. The purchase contract will state how many days you have after the date of the contract to make a formal mortgage loan application. Please do so within this time. If this is not done, the seller can claim breach of contract and you will forfeit your earnest money deposit. While this is very rare, it can happen, particularly if the seller receives a higher offer.
We will review your file and let you know what we need to prepare the loan application documents. You will have provided most of the documentation required for your application during the pre-approval process. Depending on how long ago this was, we will determine if more up-to-date documents are necessary. If so, please get these to us quickly.
We will then meet at our scheduled appointment, either at our office, at your office, or at your current residence to sign the loan documents.
The Loan Process
After you sign the loan application and associated disclosure documents and provide any required documents we need from you, we will begin processing your loan. We will order the title from the attorney of your choice, the homeowner’s insurance from the agent of your choice, and the appraisal from an appraisal management company as required by the CFPB.
We strongly recommend that you have a home inspection done as well as a pest inspection (CL100 letter) performed by a licensed professional. Your real estate agent can recommend providers of these services.
At First Nations Home Mortgage, we are here to help and guide you through the entire process until you are the proud owners of your very own home! Contact us today for more information.