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  • Writer's pictureRebecca Richardson - Mortgage Consultant

Steps to Home Ownership

Updated: Mar 25, 2021

Are you're ready to buy a house? what's the first step that you do?

The best first step that you do is that you get pre approved.

What pre approved means is that you will speak with a mortgage lender, like myself. And we will go over income, assets, credit and all those things that ultimately we'll be looking at when it comes to your loan approval. Being pre approved means that we will actually go ahead and get some of the documentation to support that information, and helps get you further down the road to loan approval.

Pre approval is a little bit stronger than getting pre qualified, which may just be some general questions possibly looking at your credit. But by being pre approved, that will put you in the best position possible. When you do find the perfect home, you're ready to negotiate with confidence. Then, you're pre approved for a mortgage and you're ready to start shopping for a home.

How do you decide which Realtor to work with?

It may be a surprise to understand that actually, buyers don't pay for the Realtor, they're actually compensated by the seller. It absolutely benefits you to have a realtor work with you when you're shopping for a home. Even if you're looking at new construction, and you don't need help finding the home you know exactly the neighborhood and exactly the builder that you want to work with.

Having a Realtor in your corner will absolutely help protect your interests. It's also helpful to make sure that you're working with a Realtor who maybe doesn't just want to come in and show you the home. But that really understands not only the general area but also that neighborhood to make sure that you're getting the best deal and that you have the best current information. It's also helpful to understand that you need a Realtor that understands the contracts in and out. They again can represent your interests all the way from getting a home under contract, to maybe helping negotiate any repairs that need to be made to also selecting a good closing attorney to make sure that you show up to closing on time, and with the terms that you expected from the get-go.

If you're looking in the Charlotte area, I would love to connect you with any Realtors that would be a great resource for you. You've got two of the most important pieces in place. Your mortgage pre approval is ready, and you've got a great realtor in your corner.

Now it's time to go shopping for homes, what does that process look like?

One thing to keep in mind is that a good Realtor is going to be able to help you narrow down needs versus wants because it can be very hard to find a home that has everything in it. But you want to make sure that it meets your biggest goals. And then also they will help you to start to focus on neighborhoods that best meet those criteria as well as your budget. A lot of times they're going to start out with asking questions about what you're looking for and start sending you listings so you can get familiar with what's on the market. From there, when things start to catch your eye, then they will be able to schedule appointments for you to go look at those homes together and see if it feels like a good fit.

Keep in mind there are different property types, single-family homes, which are standalone homes, then you have townhomes which will be side by side with other homes and then condos which are then typically what you would picture as a sort of like a high rise building. Depending on how homes are titled whether they're a single-family or a condo or a townhome that may have an impact on the process for buying the house, as well as your mortgage. With the right team, a great lender, and a great realtor will be able to be there for you to help guide you through this step to make sure that everything is clear, and that you can get what you want. You found the right house, congratulations.

The next step will be putting in an offer.

There are three main pieces for a contract, the price that you want to offer based off of feedback from your Realtor on what it would reasonably go for in this market based on reason, based off reasonable sales, when you want to close, so when you want to own the home, and then any due diligence or earnest money that's associated with the contract. And that's basically money that's given to show that you're serious about the home. And that's being held in good faith. Well, that home is taken off the market. You can proceed with your loan, do inspections on the home, get it appraised and things like that.

Keep in mind that once you write up that offer and it's submitted to the seller, then the seller pretty much has three options. They can accept it, they can reject it, or they can choose to make a counteroffer or negotiate the point of the offer. All of those pieces are parts of getting a home under contract. That's what your realtor is there to do to help you will also typically submit a pre approval letter that shows that you have done your work on getting your mortgage pre approved to again show the seller that you're serious and that you're well qualified buyer.

Now you have a home under contract, how do you make sure that it's a good buy?

How do you make sure that you're not inheriting the current seller’s problems? perhaps you do that with a home inspection and your realtor will be able to recommend a quality home inspector that will be able to go in evaluate the home and give you a report that's typically done pretty soon after the contract. So major systems like the heating and air can be inspected, the plumbing, the electrical, the foundation, things like that, to make sure that again that that home is solid, and it's something that you feel safe in buying. Because a lot of times a fear of buyers is what if there's something there that I don't know about. And a home inspector can't necessarily catch everything, but they definitely have experience and are licensed to help evaluate a home's condition.

If there's any questions that they have, that they feel like it should go a little bit deeper, then they will give a recommendation that you potentially have other inspections like potentially a structural inspection and things like that. But most of the time, those home inspections are done pretty early in the process. Again, you can still feel confident about the purchase that you're making. And that's how you use a home inspector to feel solid, about the home that you're about to save your homes under contract. And you probably have questions just to make sure that the home is worth what you're willing to pay for it.

How does that get handled? It gets handled through an appraisal. As your lender we will request an appraisal done from a vetted pool of experienced Appraisers who know your area and understand how to evaluate a home's value based off of the current market. So what will happen is the appraiser will come out to visit the property, take pictures, take measurements, make sure that all of the information is accurate as far as how many bedrooms, bathrooms, square footage, all of those things, they will then compare your home to other homes in the area that have recently sold, or maybe on the market to make sure that the value meets what those other homes have sold for. They will also make adjustments for differences in property depending on the square footage and things like that to help even it out.

Again, the appraisal is there to make sure for you and for us as your lender that the home is worth what you are willing to pay for it and what we're lending against. As you're doing things like inspections and as the appraisal is being done on your home, what's happening with your loan? What's happening with your loan is that we're making sure that we have all the documentation needed to support the data that's in your file to show that your loan meets program guidelines. Program guidelines are things that are set out depending on what loan type that you're getting, to make sure that it meets federal guidelines for that program.

What happens is, those documents are collected by our processor, and then they are submitted to an underwriter and underwriter will review them to make sure that everything is there as needed. For things that are maybe outstanding like title work from the attorney, or the appraisal or maybe an extra pay stub or whatever may be needed, then those will come back as what are called conditions. At that point, you will have what's called a conditional approval with that conditional approval or processor will let you know what's needed for final approval. Once those items have been collected, the appraisals and or something like that, then that will be submitted back to the underwriter for final approval.

Once you have final approval, you're ready to close. Congratulations, you're at the last step of the process closing. What happens at closing is that any money that is due from you for the approval of your loan for the purchase of the property, you will have received a closing disclosure a few days before closing confirming the absolute final amount and then you will wire those funds to the closing attorney. They hold them and then pair them up with our loan to make the seller whole on the purchase price that you've agreed to pay. At closing, you will sign documents that legally make the house yours. Once those documents have been signed, we as the lender, approve them and sign off on them. Then the money for the price of the home goes to the seller. And then at that point the home is recorded with the city and county that you are now the new owner. It's at that point that then you receive your piece and the house is yours.

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