How Does Financing Work?
Wanting to buy a home but you simply don’t know how the whole loan thing works? Don’t worry, you are not alone! Even homeowners might not understand the whole process either. So, let’s breakdown what exactly happens in order to get a home loan.
Pre-Qualify Appointment
To kick things off, we start with a pre-qualification appointment. This can sound intimating or like a lot of pressure but it is an easy, 15-30 minute appointment to see what you can afford. We will get a few income documents from you such as the last 2 pay-stubs from each borrower, last 2 months of bank statements, and we will also pull credit. Knowing what you can afford before you start house shopping will ensure you don’t get your heartbroken when you find the “perfect” home that you actually can’t afford.
Finding Your Dream Home
In this step, you will be working with your real estate agent to talk about your home wants and needs, go see actual homes, and when you find the perfect home, submit an offer. The real estate agent you choose can make or break your home buying experience. Be sure to do your research and hire an experienced, on the ball type of realtor that will put in the work for you. We give you permission to use a pro instead of your mom’s best friend’s nephew who has never actually sold a home before. This is, after all, the biggest financial decision you will make!
Once your offer is accepted (cue the air horn!) you now need a home loan and luckily/smart of you to listen to our advice and do things in order, you have set yourself up for a smooth ride. It’s now time to jump right into the mortgage processes!
Under Contract
In this process, you will now be working with your processor. Your processor does a TON of work behind the scenes (seriously, they are rockstars) to get your loan ready to close and fund. This is where you will get your estimated closing costs, monthly payments, and taxes based off your actual loan numbers. You will also get your interest rate locked in too. Depending on your real estate contract, you should get an estimated if not final closing date as well. If you’re not sure what this date is, your agent will be able to answer this for you.
Initial Underwriting
Once the processor sets up the file, it gets sent to the underwriter to start combing through each page and document of the loan to make it an official financial document. An appraisal will also be done on your new home to make sure you are not overpaying for what the homes actual value is.
Conditions
This is the most unpredictable step. 99% of the time, your underwriter will need more documents to close your loan. Since everyone’s situation is literally different, we can’t predict what they will ask you for. However, your processor will keep in touch with you and ask you for what is needed. Be prompt in this stage because any delays on your end will delay the process and could prevent you from closing on time. No bueno.
Final Underwriting
Once the needed conditions have been met, you are almost ready to close! You will also get your final loan numbers, monthly payment, and down payment as well as your closing date. The final document you will get from your processor to sign is called your closing disclosures which means you are clear to close. Yay!
Closing/Funding
This is the final step of the loan process. You are doing a great job and your home is almost officially yours! You will have a face to face appointment setup with your title company and your real estate agent to wet sign your official loan documents. Typically this takes 1-2 hours total and you will be a master at your own signature by the time you are done. They will walk you through each page and let you know what you are signing. Don’t hesitate to ask questions in this step. You should understand what you are signing your life away to, after all.
You’re a Homeowner!
You did it! It took a few steps to get here, but you did it and hopefully you had so much fun along the way.
If you are ready to get started with the home buying process, please reach out to us here at The Ben Lemon Team at 801-507-2700 to get exact numbers, to get pre-qualified, or to simply ask any questions you have about becoming a home owner.