Save time and frustration by determining what you can afford to pay for a house before you start looking. Any affordability calculation needs to take into account costs related to owning a home (monthly mortgage payments, property taxes, property insurance and maintenance) and other financial obligations (credit cards, auto loans, student loans, etc.)
Next you need to find a lender, if you are not paying cash for your home. A lender will arrange financing for your home – he/she will work with you to find financing with rates and closing costs that meet your financial goals. Just interest loan charged on a loan is not the only factor to look at while comparing loans. Closing costs should also be compared. APR (Annual Percentage Rate) which incorporates closing costs is a better way to compare loans with similar terms. Beyond interest rate and closing costs, services provided by the lenders should be a consideration too.
There are different types of lenders to choose from:
It is always a good idea to get Pre-Approved and a Pre-Approval Letter from a lender before you start shopping for a home. It gives you considerable negotiating advantage with sellers and real estate agents in a home buying transaction. Also, after going thru the Pre-Approval process, you will know a more exact amount that will be available to you for a home purchase – it avoids a surprise if you wait until you have signed a home purchase contract.
Now you can go ahead and search for a home with confidence knowing you have financing in place. Most likely you have already chosen a real estate agent who is helping you in the buying process, including this one.
During your search process you may like a home you would like to purchase. You will then work with your real estate agent to submit an offer to buy the property. Remember, in a hot market where a seller is presented with multiple offers, it is always good to have a Pre-Approval Letter. Pre-Approval is a more rigorous process and involves verification of income, employment, assets, etc. Pre-Approval also requires a credit report and credit score. This means that a Pre-Approval Letter carries more weight with sellers and real estate agents indicating a serious buyer and quick a close.
After an offer has been accepted and both parties have signed the sales contract, the Pre-Closing process begins:
Your loan is approved, appraisal is done, title report came up clear and all conditions (in contact and escrow documents) are met – now the closing process begins: