What happens when buying a house?
Mar18

What happens when buying a house?

Our “First-Time Homebuyers” series continues this week with another entry from Dave Chmiel of Ruoff Home Mortgage. Last time I talked about getting pre-approved for a mortgage. This time I’d like to let you know what happens when buying a house! So, you got pre-approved, found the right realtor to work with who found you your dream home. You made your offer and it was accepted by the sellers, you are now on your way to home ownership! So, what happens now? At this point your lender will need a copy of the completed purchase agreement. The purchase agreement will have most of the information needed to set up your official mortgage application, like sale price, seller paid closing costs and closing date to name a few.    Once the application is completed, it is now time to sign! Make sure that you get a good review of the loan estimate before you start signing. The loan estimate shows you the type of loan you are applying for, the monthly payment, the estimated cash that you will need to close and that is just the first page! Page two will itemize the costs and page three is loaded with information too! Don’t be intimidated by the stack of documents that you will be signing, they all have a purpose and most are disclosures designed for consumer protection. Now that the loan documents are signed, your lender will submit these into the “pipeline” where a case opener and processor will get everything for the underwriter. Once everything is in order, the underwriter will review the application for approval. During this time you will need to shop for your homeowners insurance, you will more than likely get an inspection done on your new home and your lender will order the appraisal.   In about a week, give or take a couple of days, the underwriter will issue and approval with conditions. It is hard to turn in a complete application the first time, so conditions are the last few items that the underwriter needs to approve your loan. You will work with you lender to collect these and once these are all rounded up, it’s back to underwriter for everyone’s favorite words, “clear to close”! Once the “clear to close” is issued, you will schedule your closing and work will begin on the final Closing Disclosure.  The Closing Disclosure looks a little bit like the loan estimate that you saw in the beginning with more detail. Also, the loan estimate was “best guesses” on somethings, the closing disclosure will be the actual costs. Once you view the closing disclosure, there is...

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Mortgage Pre-approvals for First-Time Homebuyers
Feb17

Mortgage Pre-approvals for First-Time Homebuyers

Our “First-Time Homebuyers” series continues this week with an entry from Dave Chmiel of Ruoff Home Mortgage. It is never too early to start the mortgage pre-approval process! Many first time homebuyers are excited to get out and to start looking at houses but can end up disappointed that they may not qualify to purchase their dream home.    Consulting with a mortgage professional before you start you home search is the best place to start.  The mortgage process can be intimidating and overwhelming but a step that all must take when purchasing a home. A good mortgage professional will take the time to educate the buyer, evaluate their ability to buy and hopefully end up with a mortgage product that best suits the clients needs.    The first step in the mortgage pre-approval process is to check credit reports. We look at all three reporting agencies and use the middle score to qualify. Credit score is very important as this will affect interest rates and what loan program we use. In the event that we do not have a qualifying credit score, we can look for some solutions to help.   So, we have a qualifying credit score, now we need to determine what loan program will help the buyer achieve their goal. There are conventional loans in addition to FHA, USDA and VA. Some of these have minimum down payment requirements, household income limits or location restrictions. There are also programs that can help with down payment.    A loan program has been chosen, now we will see how much house a buyer can qualify for. This is done by determining eligible income. This can be tricky if the buyer works on a commission or is self-employed. Time on the job can factor in on what is eligible and not.   The buyer’s debt to income (DTI) ratio is what we look at. DTI is calculated by adding all liabilities to the proposed mortgage payment and dividing by the income.   Finally, the final step is checking assets. A buyer will need down payment and to cover any closing costs not covered by seller concessions. We will need to look at bank statements. Other options for down payment can be a 401K withdrawal or a gift from a family member. There are proper steps to take when using one of these options so check with you mortgage professional before doing anything. Here is what we need to complete the mortgage pre-approval process: Pay stubs-most recent and covering 30 days, so if you are paid weekly, we will need five. Federal tax returns and all W2s/1099s associated with these...

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