Your Mortgage Start to Finish
There are several factors to consider when shopping for a new home. The following information provides a guide to help you make an informed decision and avoid common pitfalls along the way.
The Process for Buying a Home
- Meet with the Loan Officer to determine the best loan program based on your financial goals and needs.
- The Loan Officer will provide a Home Buyer Analysis letter to strengthen your offer on a new home.
- Begin looking at homes with a Real Estate Agent.
- Once you find your home, your Real Estate Agent presents an offer on your behalf. The offer is accepted, the P&S is signed and a closing date is set.
- Complete mortgage loan application and submit all the required documents.
- Appraisal, title paperwork, insurance binder and other documents are ordered.
- The complete loan file is submitted to an underwriter for review. Any final conditions are collected and a final loan approval is issued.
- Your loan is cleared to close.
Your credit score is one of the most important numbers you have. Not only does your score affect your interest rate when applying for a loan, it can also impact your insurance rate, certain job prospects and even your chances of renting a great apartment. As a result, improving one’s credit has become a multi-million dollar industry.
Credit scores were developed by Fair Isaac and company (FICO). The models created using FICO take all the detailed information about your credit report and produce your credit score using different weights and factors contained in the FICO scoring models.
The purpose of a FICO score is to show how likely you are to become at least 90 days late in making payments in the next 24 months based on patterns in your credit history, compared with patterns of millions of past customers. Other credit agencies, such as Experian, Equifax and TransUnion, calculate their own credit scores within their own ranges; however, the FICO score is the standard that lenders use when they pull your credit.
- FICO scores are used not only for a mortgage loan and credit cards, but for auto loans, insurance and utilities.
- Credit reports reflect charge offs or collection accounts for up to 7 years, and bankruptcies for up to 10 years.
- You can order a free credit report annually, at no charge, without impacting your credit score.
- Having a minor balance without missing a payment is better than closing an account.
- Paying off an old collection may result in a drop in your credit score.
- Consolidating credit cards increases your ratio of debt to available credit and lowers your score.
- Using the maximum amount on a credit line can drop your score.
A closing is the last step in buying your new home! The closing happens after your home has been inspected, your contingencies have been met and your mortgage loan has been approved. While the closing day can seem both overwhelming and exciting, the key to a successful closing is to be prepared.
What is a closing?
A closing is a meeting that involves all of the parties signing the final documents and legally transferring the property to you. There are costs and fees in this final step of which you need to be aware. When you are finished signing the closing documents, you will be given the keys to your new home. The mortgage process is now complete, and you are officially a homeowner!
Who will be there?
Usually, the closing takes place at a closing agent's office. The following individuals should be there or be represented:
- You and any co-borrower if they are involved in the transaction
- The seller or the seller's legal representative
- Closing agent
- The seller’s real estate agent
- Your real estate agent
The thing you’ll probably remember the most is how many times you had to sign your name. There are lots of documents that need your signature. Here’s an overview of what will happen:
- You will sign a document indicating that you have accepted the mortgage loan from your lender. In some states, you will sign a mortgage, and in other states you will sign a deed of trust.
- Your lender will transfer the money to the seller on your behalf. The seller will then sign a document called the deed, transferring ownership of the property to you.
- The closing agent will coordinate the preparation, execution and, when necessary, recording of all documents.
- Additionally, there will be a number of affidavits and declarations for you to sign. These legally binding documents spell out the financial obligation you are taking on and your rights as a homeowner.
Make sure you understand what you’re signing. It is important to read the documents carefully. Don’t hesitate to ask questions. The closing agent will go over the documents in detail before the actual closing, so you are comfortable with the process.
The day you close on your new home will be one of the most rewarding experiences of your life. While home ownership does come with responsibility, you’ll take pride in the fact that you have a new home for you and your family to enjoy now and in the future.
If you would like more information or just need some advice, we can provide guidance every step of the way. Whether you are interested in buying a new home or refinancing, we are here to help you with a call, email, phone or text.