Once you have decided that you are ready to buy your first home, it’s time to start the process. The general process can be viewed as steps, which are covered below:
First thing that you will want to do is find a loan officer that you trust. The loan officer will play one of the most vital roles in your home buying process. Your loan officer will be the one that will work on your behalf to get you to the closing table. He/she will work with the lender and/or underwriter to make the process as smooth as possible. Along with finding a loan officer, you will need to find the right real estate agent. Your real estate agent will be the person helping you find the perfect home.
So how do you find the right loan officer and real estate agent? Start by asking family and friends if they have any recommendations. Compile a list of both loan officers and real estate agents, and talk to each before making your final decision. The decision is yours to make. You want a loan officer and real estate agent that listens well and understands what you need, and most importantly you want to trust their judgment.
Next you will want to find a house. Things to consider when deciding on your housing needs are features that you require (number of bedrooms, baths, living area, etc.). You may want to consider making a list of your requirements before looking at homes. Does the house need to be in a certain school district? Does the house need to be a certain distance from your work? Public transportation? Is there a certain amount of square feet you want the house to be? What about the yard? Fenced in, large, pool? Once you determine the features that you want, you can go over these with your real estate agent to make sure that your real estate agent is providing you with an ideal list of homes to see.
Generally it is a good idea to speak to your loan officer at this point. Your real estate agent has probably given you a general idea on price range and neighborhoods that meet your needs. Now the loan officer can run some preliminary figures to determine an estimated mortgage payment and what loan programs you will be eligible for. If you have any concerns on the mortgage payment or down payment requirements, make sure to let your loan officer know. Your loan officer can go over different options that you may have, and if you might need to lower the purchase price range that you are seeking.
Now it’s time to put an offer in on a house. You’ve went over estimated mortgage payments and down payment requirements with your loan officer, and have talked about the homes that are for sale with your real estate agent. Once you find the house that meets your needs, and that gives you a mortgage payment you are happy with, your real estate agent will submit your offer. There may be some negotiations involved at this point. The seller may come back and ask for a higher price, or to pay less of your closing costs, and then you respond with your counter offer. Once you and the seller come to agreement on the terms, your offer will be accepted.
Time to start the loan process. Your loan officer should have already provided you with a list of documents that he/she will require to process your loan. These items include paystubs, W-2s, Federal Tax Returns, Bank Statements, copies of your driver’s license. Your loan officer will now go over your options to lock your interest rate. He/she will discuss the different rates that are available and their associated closing costs and monthly payments. Once you have determined you are happy with a specific interest rate, your loan officer will lock the interest rate for a set time period (generally 30-60 days). Your loan officer will also generate the preliminary loan disclosures for you to review and sign/date. When the loan officer has received the executed purchase contract, the signed and dated preliminary loan disclosures and your income/asset documents your loan will be submitted to the lender/underwriter.
At this point the loan officer will order the appraisal and the title report. At this stage you will also probably be ordering the home inspection. The home inspection is coordinated by you and the real estate agent, as it is generally not required for your loan. It is usually a good idea to get a home inspection. A home inspector checks the safety of your new home, they focus on the structure, construction and mechanical systems in the house. Once the home inspection is complete the inspector will provide you with an in-depth report that will disclose any repairs that are needed.
You should start looking into home owners insurance. Generally, you should treat this like you did when looking for a loan officer and real estate agent. Talk to a few different home owners insurance agents/companies and get quotes for your new home. Make sure to disclose if you have any other insurance policies that you would be moving over to them (auto, boat, etc.) as you may qualify for discounts.
Your home inspection, appraisal and title work are all complete. Also, the initial underwriting assessment is complete by the lender/underwriter. Your loan officer will go over any additional documentation that the lender/underwriter has requested, and any potential issues that the lender/underwriter has communicated. When you have provided the additional documents to your loan officer, he/she will re-submit them to the lender/underwriter for review.
Inform your loan officer who you will be using for home owners insurance, and provide their contact information to your loan officer. Your new home owners insurance policy will need to include the lender’s information, which your loan officer will provide to your home owners insurance agent.
After the lender/underwriter has reviewed any additional documentation that the loan officer submitted, and there are no other documents required, the lender/underwriter will issue a Clear to Close.
Your loan officer will alert you and your real estate agent that a Clear to Close has been issued. Now it’s time to set a time, date, and location for the closing to take place.
Once everyone is in agreeance on the closing date, time and location, your loan officer will schedule it with the title company.
There may be a few disclosures that your loan officer needs you to sign/date. One is the Notice of Escrow of Taxes & Regular Monthly Payment disclosure that discloses your final mortgage payment, and must be disclosed between 24-72 hours prior to loan closing.
Close your loan. Depending on where in Ohio you are, closings may be handled differently. In a majority of Ohio the sellers and buyers and their real estate agents will all be present at the closing and sign the appropriate closing documents. Upon completion, the sellers receive their check, the real estate agents receive their checks, and the buyer writes their check. However, in Northeast Ohio it is common for the buyers and sellers to sign their paperwork at different times. The money from the loan would be disbursed the same day, depending on the lender and the title company.
Time to move in.