When you are working with a good team, you should find that buying a home is a neatly organized and orderly process. If you are a first-time homebuyer or it’s been a long time since you last went thru this process, this step-by-step guide should help provide a concise overview of the sequence of events:

  • Pick your Realtor. First, buying a home should never be done without an expert representing your interests. It’s a much bigger job than simply pointing out that “This is the kitchen…” and sending you listings from the MLS. Trust me.I certainly can recommend someone I know and trust who is an expert in the specific area you are searching in. If you are getting recommendations from others, make sure that you do your due diligence to ensure that they have the ‘Right Stuff’ and, more important, that the chemistry is right.
  • Get Pre-approved for a Mortgage: This is a critical early step where we’ll look at your income, assets, credit profile, and – most important – identify your comfort-level for a monthly payment. This is a big idea: it’s not how much the bank will approve you for but what you’ll approve yourself for that’s important. For most people, I can provide a pre-approval immediately and get them out shopping for a home in the price range that gives them a monthly mortgage payment they’ll be comfortable with.Sometimes, however, there’s some additional work to be done. For example, if the credit profile has some blemishes, I’ll come up with a plan to rebuild and raise the scores in the fastest possible time (this is a free, value-added service I offer). In other cases, we might be looking for additional useable income or assets to make a deal work. I always make sure that a client completely understands what their options are and what they need to do in order to obtain a mortgage.
  • Start shopping for a home: This is one of the fun parts – truly. Your Realtor will be sending you listings that match your search requirements (See my article “How to Help Your Realtor” and download the “Home Search Checklist”) and you’ll schedule showings for those that interest you. Here’s a tip: Reality-check the monthly payment and total cash required to close using the calculator on this site (or that I’ve sent to you) so that you know that it fits within (or close to…) your budget and, if you are looking for the seller to contribute to your closing cost, how much to ask for.
  • Submit an offer: This is a nerve-wracking step and also one of the big reasons you want a professional realtor working with you. No one can tell you how much you should offer but, in general, the more recent the listing, the less flexibility the seller will have and, conversely, the longer a listing has been on the market, the more likely it is that a seller will respond to a reasonable offer.This is the point where you’ll begin investing money in the process. To show that you are acting in good faith, you’ll issue a personal check for a modest amount with your offer. This is called an “Earnest Money Deposit” and is returned to you if the seller doesn’t accept your offer or if something comes up in the process that causes you not to move forward.There’s often some back on forth while you and the seller negotiate a mutually acceptable price and terms. This can be an emotionally fraught time partly because you’ve found “the one” and partly because the seller may not be forthcoming. My only advice is to approach this with as much detachment as possible and recognize that you can’t know the seller’s mind, and thus, you won’t know why they do what they do.
  • Inspections and more negotiations: Once your offer has been accepted by the seller, you’ll have a limited window (usually between 10 – 14 days) to complete the property inspections you decide to have performed. You’ll spend anywhere from $500 – $1,000 for your home inspections, depending upon the type of water and waste systems.Typically, the inspections will yield some items that need repair and your realtor will, at your request, submit a list of items to the seller. The seller has the option of agreeing to some or all of the items you have asked for. They may counter-offer with a reduction in price or a credit (Note: there are special rules about how this is handled).Once you’ve arrived at a mutually acceptable agreement, you will make a 2nd Earnest Money Deposit by certified or bank check. This amount is usually for a larger sum than your first deposit and is meant to ensure that you are committed to the deal.Sometimes, the inspections reveal conditions that you decide make the home unsuitable and, if that’s the case, you have the right to terminate the contract and receive a refund of your initial Earnest Money Deposit.
  • Mortgage application time: This step should happen in the same window of time as your home inspections to ensure that we meet your contract timeframes for your mortgage contingency and closing date. At the application meeting, we’ll sign the actual loan application and also review a lot of documents and disclosures that are required by Federal and State regulators.Here is a basic list of documents that I will need you to make available to me (I often have clients upload these to a secure website in advance to save time). There may be additional documentation that I request from you based on the loan type and/or your special circumstances but the following items are always required:
    • W-2s or 1099s for the most recent 2-years
    • Federal tax returns for the most recent 2-years
    • Paystubs for the most recent 4-weeks
    • Bank statements for the most recent 2-months (actual statements)
    • Bring your Driver’s License and Social Security card
  • Underwriting and approval: Once I’ve taken your application, I will submit it to the lender I’ve determined is best suited for your particular circumstances. An underwriter (a specialist who reviews loans according to the rulebook for the type of loan you are taking out) will review your loan and approve it within 1-week of your meeting. They will most assuredly ask for additional information and I will be in touch to request these items from you.During this time, we’ll also be working with the closing attorney that you’ve selected to obtain the documentation the lender will need from them. The attorney’s role in this process is to make sure that you are buying a property with good title (meaning that there aren’t any issues that could adversely impact your right to use, enjoy, and transfer the property in the future) and to work with the seller’s attorney to make sure that the closing goes according to plan.We’ll need you to select who you want to use for your homeowners’ insurance and have them provide us with documentation showing that you have the right coverage to protect you and the lender. You will need to pay for your policy for the first year at least 2-weeks prior to closing so that we may show the lender that coverage is in place.During this time, it is essential that you discuss any and all issues that affect your finances with me before you make any changes. I recommend that you review this link on “Tips for a Smooth Loan Approval” so that you are aware of some of the key issues that could impact your loan.
  • Mortgage Commitment and Clear-to-Close: The “Mortgage Commitment” is a document that communicates to you and the seller that the lender has agreed to lend the money to you and that there are few, if any, remaining items before you may close on the loan. Once this document has been provided to the seller, your Earnest Money Deposits are no longer refundable if you decide not to close for any reason.Sometimes, there will be a delay in getting to the point where we are able to issue the mortgage commitment. When that happens, I will work with your Realtor to obtain an extension to the commitment date.Once all of the items that the lender is looking for have been reviewed and approved by the underwriter, they let us know that your loan is ‘cleared to close.’ That important milestone allows us to schedule your closing date and begin the process of generating the documents that you need to receive and review prior to closing.
  • Closing Day! You’ll meet with your attorney (typically at her or his office) to sign the mortgage documents. Once those documents have been signed, the seller and their attorney will arrive and sign the documents that make the home yours. While there are a lot of documents getting signed, it’s an exciting time – your journey as a homeowner has finally begun!

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