Frequently Asked Questions Regarding the Home Buying Process
We have always strived to make the process easier for our clients. Purchasing a home is the most important financial investment you will make in a lifetime. Achieving the American Dream of Homeownership should be one in which we carefully guide you through the process so that it is a positive experience that you will remember. Here are a few questions that first-time buyers typically have…
1. At what point in the process should I apply for a mortgage? The best time to apply is before you purchase a home. Getting a “LoanFirst” pre-approval will give you more negotiating power with the seller as well as make the process smoother because you will know within what price range to be shopping.
2. How long will it take for our loan to be approved? After you have submitted your application, loan approval typically takes just a few days if the documentation we ask to be provided (see form attached) is complete. The more complete the information, the more quickly we can act.
3. What is the process after the loan is approved? Assuming you have a sales contract signed for a new home, the next step is to make sure all conditions are clear. Many of these conditions are standard and are provided by third parties, such as obtaining an appraisal and clear title. The quicker these conditions are received, the smoother the settlement process.
4. What is the difference between a pre-approval and pre-qualification? A pr e-qualification is an opinion on whether you are qualified for the mortgage and does not mean that the information provided has been verified or the file has been underwritten. A pre-approval means that the relevant information has been verified and the file has been underwritten and approved. The file typically would be approved subject to writing and submitting a sales contract, satisfactory appraisal on the property selected and locking in a rate and loan program.
5. When can I lock in a rate on the loan? Typically you can lock in the rate after the application is complete and after a sales contract is ratified. Rates change daily and sometimes more than one time per day and we can keep you informed as to how the markets are changing.
6. How much money will I need at closing? You will need money to cover the down payment and closing costs and escrows. The closing costs are itemized on the Good Faith Estimate of Closing Costs, a government required form we will provide. From this number, you can subtract your deposit that is being held by the Realtors and any closing cost credit paid for by the seller.
7. Can I borrow the money I need for closing, for example, place a charge on my credit card? Each program is different with regard to how you can procure the funds necessary as well as the cash reserves needed after closing. We advise you not to borrow any money until you close on your home, at least not without talking to us first. A car or furniture purchase could change your qualification status.
8. Whatt is inc luded in my mortgage payment? We refer to the payment as the “PITI.” This stands for Principal, Interest, Taxes and Insurance. Principal and interest refers to the payment on the loan and taxes and insurance is payment for bills that will be due each year. We refer to these as escrows, or money you put aside (or escrow) for bills to pay due. Insurance is typically for a “homeowner’s policy” to protect your house but there may also be monthly mortgage insurance charged by FHA or conventional lenders.
Also many homes have homeowner association fees that cover charges for common areas such as pools and tennis courts. If you purchase a condominium, the PITI will not include insurance because your condo fee will include insurance. These fees are in addition to the PITI and paid directly to the association.
9. Will I get a copy of the appraisal of the property? Yes, you will be provided with a copy. If there is a “problem” with the appraisal, for example, if the value is less than the sales prices, you will be notified promptly.
10. Will I get a copy of my credit report? Yes, we will be able to provide you with a copy of your credit report. The Fair Credit Reporting Act requires that this information cannot be shared with other parties to the transaction and therefore it must be provided to you directly.