Loans: from calling to closing
By Nicole Rueth - August 4, 2020
Buying a home can be extremely exciting, but for many buyers, it can be confusing and even overwhelming. The process can also be lengthy, but it does not have to be as daunting or stressful as you might think. Arming yourself with information and the right mortgage team ahead of time can go a long way toward making the process much easier and more enjoyable.
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If buying a home is one of your goals in the near future, here are six steps to help you navigate the process of securing your dream home sooner than later:
1. Complete a loan application
This is where you will sit down with your mortgage team, discuss your situation as well as your goals for the home you’re looking for, and start to make them a reality through a pre-qualification letter. A mortgage pre-qualification is a high-level overview of your credit and capacity to repay a home loan, and will allow your mortgage team to pinpoint exactly what your price range should be. The meeting is typically brief and is where a loan officer will ask you questions to get an overall assessment of your credit and financial situation as well as the long term goals for the home. Once you know how much you are pre-qualified for, you’ll be able to confidently look at homes that fall within your budget.
Before you begin the mortgage pre-approval phase, it’s important to get organized with all of the documents a lender will need to underwrite your loan. Anything you can do to prepare in advance will reduce the turnaround time for your approval once you find the right home and are ready to make an offer. When you’re ready, you’ll want to be able to hand over all your paperwork at once so you can make an offer quickly. Your mortgage team should provide you with a list of all the documents required ahead of time in order to make the process as smooth as possible and eliminate any potential surprises. After reviewing the loan documents, your pre-qualification letter will be upgraded to a pre-approval letter, which lets sellers know you are a serious buyer. In a hot market like Denver, it’s common for sellers to entertain multiple, competitive offers, so the winning bid often goes to the buyer who is already pre-approved because it lets the seller know you are serious and ready to buy.
2. Get organized for pre-approval
Whether it’s your first home or you’re a seasoned homeowner, you’ll know when you’ve found the right home, and you’ll want to act on it quickly. This is where many lenders can drop the ball by taking too long to get everything approved, which can cause you to lose out in a competitive market. Your mortgage team should set you up for success with a solid pre-approval, so you and the seller already know you are ready to go and set up for a quick closing. As far as the offer itself goes, your real estate agent will know the ins and outs of how to structure it, which will include any potential contingencies that must be satisfied before the deal is complete, such as appraisals, inspections and final loan approval.
3. Find your dream home and make an offer
Once the home is under contract, your mortgage team will disclose your loan, lock in your interest rate and order the appraisal. This is a busy time, so this is where being as prepared as possible will help things go smoothly and ensure a successful launch of the loan process. Working with a reputable mortgage lender goes a long way to ensure speed and accuracy in the underwriting process. The underwriter is the key decision-maker, and they will closely evaluate all the documentation prepared by the loan processor in your loan package, and cross-check to see if the borrower and property match the eligibility requirements of the loan.
4. Underwriting, disclosures and appraisal
As underwriters review your documents, it’s common they may ask for additional items to clarify the facts and ensure standards are met as defined by industry guidelines. Don’t panic - your mortgage team will ensure you know exactly what they need to get the celebrated ‘Clear to Close’ as quickly as possible. You will receive your “Initial Closing Disclosure” three days prior to closing, then once received, the title company and your mortgage team’s closing department will work together with a host of third parties to provide the “Final Closing Disclosure” 24 to 48 hours before the closing date.
5. Loan approval and closing disclosure
The final closing disclosure reflects your required cash to close. The cash to close will need to be in “good funds” which is either a cashier’s check or a wire transfer from your bank. Once that is complete, it’s closing day! The closing meeting will take a couple of hours, and your mortgage team will work with you, your real estate agent and the title company to ensure your loan documents and loan funds are waiting for you in advance. Once everything is signed, your participation in the closing is done, and it’s time to celebrate! The very last closing items happen in the background, and the title company will complete the recording and funding.
There you have it! The mortgage process doesn’t have to be intimidating or overwhelming, and now that you have these key tips, you’ll be well prepared to feel more comfortable about what to expect along the way. Your home is likely the most expensive asset you will purchase in your lifetime, but having a trusted team by your side each step of the way will make the process more exciting and less stressful. Contact The Rueth Team today for more information on how you can leave the stress behind with Fairway Mortgage.
6. Cash to close