10 Steps to Homeownership
- Loan pre-approval. Pre-approval allows you to search for a home that you can afford based on your credit, income and assets.
- Home search. Once pre-approved, start shopping with your real estate agent! When you decide on the right home for you, the terms of sale are negotiated and your agent presents your offer to the seller's agent.
- Formal loan application and product selection. After the seller accepts your offer, formally apply for home financing and select the ideal loan product to meet your needs.
- Appraisal and home inspection. As your loan application is being processed, an appraisal is ordered to identify any discrepancies between the sale price and appraised value. An inspection of the property is also conducted if you request it. A home inspection is optional, while an appraisal is required by most banks.
- Processor's and underwriter's review. A loan processor reviews the entire loan file and sends all pertinent information to an underwriter who makes the final decision to approve the loan.
- Final loan approval. Keep in mind that there may be financial conditions or property conditions that need to be met before final loan approval.
- Closing. Final loan and escrow documents are prepared and signed by you (the buyer) and the seller.
- Funding. A wire or check for the amount of the loan is sent to the settlement agent.
- Close of escrow. The loan funds are disbursed to the entitled parties and escrow is “closed”.
- Confirmation of recording. Documents that transfer titles are recorded with the county to legalize you as the new property owner.
Final step....move into your new home! I would be happy to share my lender referrals with you.
Most Common Fees To Expect At Closing....
Here is an explanation of some of the fees you can expect at closing.
LOAN ORIGINATION FEE. This fee covers the lender's administrative costs in establishing the new loan. It is generally expressed as a percentage of the loan amount.
LOAN DISCOUNT. Often called “points”, a loan discount is a charge used to allow a lower interest rate than the current market rate. One point is equal to 1% of the loan amount.
PROPERTY TAXES. Based on the month you close, property taxes will be prorated between you and the seller.
HOMEOWNER'S INSURANCE. You will be required to pay an entire year's homeowner's insurance premium upfront at closing,
PREPAID INTEREST. Depending on the day of the month your loan closes, this charge may vary from a full month's interest to just a few days' interest.
PRIVATE MORTGAGE INSURANCE (PMI). Depending on the amount of your down payment, you may be required to put a certain amount of PMI into an escrow account.
TITLE INSURANCE. These fees cover both the buyer's title insurance and the lender's title policy. The settlement agent may also charge fees for a title search, settlement/closing, recording, notary services, document preparation, and title examination.
LOAN PROCESSING AND UNDERWRITING FEES. These fees offset the cost of processing your loan, obtaining all the necessary documentation, and evaluation of your loan application package.