By: Dan Brown
Quite a few of our clients come into the mortgage process relatively blind. Not knowing what’s to come can make such an important decision more stressful than it needs to be.
At the Kelly Mortgage Team, we always take the time to educate our clients throughout the entire home-buying process so that they can make the best decisions possible – and do so with as little stress as possible. We want you to be able to do the same and with that in mind, I’ve outlined all the essential information you need to know into a simple five-step process.
The initial step for every client is getting prequalified. Essentially, prequalification establishes a baseline loan amount that you can obtain from a lender. This information is based on your needs, wants and qualifications and will help you know your financing options are as you search for a home. At the Kelly Mortgage Team, it involves three things…
The call itself is very important for the client because deciding which loan officer to use should go way beyond the potential terms of the loan. We feel strongly that you should focus on finding someone who speaks your language, is patient and explains things in a way that helps you make sense of what lies ahead. Trust and being comfortable are critical components for any successful financially based relationship and can make all the difference for you as you look for your new home. At the Kelly Mortgage Team, we put a lot of emphasis on this part of the process which helps us feel more connected to our clients and results in a better experience for everyone.
Although in many cases a pre-qualification can be issued based on the initial verbal conversation, the simple fact is that the specific details matter. That is why it’s important to have your mortgage consultant review the documents which support the information that was discussed before you are under contract. That list generally includes two years of income statements such as W-2s & tax returns, one month of pay stubs, and two most recent bank statements. Additional documentation may be required depending on your specific situation. We feel strongly that when we get an opportunity to review the paperwork in advance, it can help us identify potential hurdles, reinforce our pre-qualification, as well as cut down on processing time for our clients once they are under contract.
In 2018 although the convenience that technology brings can enhance the loan process, we have found that spending time together, in person, to discuss the loan options is incredibly beneficial for our clients. That personal touch is invaluable when reviewing loan options, discussing the process or common mortgage terminology, and gives us a roadmap for a successful experience. One of our main goals is to ensure that the client’s expectations are in line with the market. During this meeting is when work together to establish a price range, an estimated monthly payment and potential cash required at settlement for a home that you qualify for and love.
2. Choosing a Home
Now that you have been prequalified, it’s time to find your home, make an offer, and get under contract.
You’ll start working with a Real Estate Agent using the guidelines set during Prequalification to begin your initial search. Finding homes in your price range typically start with online searches and eventually leads to walking through those homes that you like.
While looking online, we strongly encourage our clients to send us a few of their favorites so that we can put together more accurate financing options for those potential homes before they go to see them. This step usually has the client walking into the home feeling very confident with the estimated monthly payment and total cash required. Some will find the home of their dreams quickly…for others, it can take time. Which is why we like to get a sense of the financials going into a walkthrough so our clients can be decisive and aggressively pursue a home they feel is right for them.
Make an offer and getting Under Contract
Eventually, you’ll fall in love with a home and make an offer. This begins a process where the Real Estate Agents will assist their respective buyer and seller negotiate things like the purchase price, settlement date & various home inspections among other things. Once buyer and seller have agreed to the terms, a contract is signed and the home buying process begins.
3. Processing & Underwriting
Now that you are under contract, it is recommended that you hire a Home Inspector for an invasive walkthrough of the property. This is the process where a trained eye can spot potential defects & repairs that may not be visible at first glance by a Buyer or Realtor. The Home Inspector’s primary focus is to uncover any potential issues and give the buyer a sense of the overall quality of the home.
This is also the time that to convert your pre-qualification to a complete application and submit your loan to Processing & Underwriting. Your loan will typically be electronically disclosed based on the financing option you chose. The Kelly Mortgage Team will also introduce you to one of our experience processors who will assist throughout the approval process. Our Processing team will order your appraisal, any required verifications as well as work with you to get any updated paperwork that has expired. An Underwriter will also review the loan structure and documentation to ensure that it meets the guidelines and request any necessary outstanding documents. If the process is done correctly, this list is typically small and simple to satisfy for clear to close.
During the entire process you will be receiving various disclosures that alert you to changes to the estimated terms of the loan. Like a bull’s eye, you start the process on the outer rings as most of the information is estimated. As you move further into the loan process, you move to the inner rings as the specific details become more clear and accurate. At least 3 days in advance of your settlement, the law requires that you receive the Closing Disclosure for acknowledgement. This is the ‘Bull’s Eye’ document which will accurately break down, in detail, the important components of your loan as well as an itemized breakdown of the cash needed for settlement.
Once you have reviewed and acknowledged the Closing disclosure, the only thing left to do a pre-settlement walkthrough of the home to ensure it’s still in good condition and get your cashier’s check for the money due. Show up, sign closing documents and collect the keys!
5. Move In
Upon handing over your cashier’s check and signing the closing documents, the house is yours! Hopefully you have some good friends and family available to unpack your boxes as you start moving in and making it your home.
At first, the mortgage process can seem daunting and complicated. However, we’ve been helping people successfully buy homes year after year, and we’d be happy to help you too. If you have any questions about getting a mortgage, don’t hesitate to contact me any time.