Nov. 27, 2010

The Purchase Process: Financing-Step 1

Purchasing a home can seem daunting whether you are a first time home buyer or have purchased a home before.  It is something we all dream about and desire, but don't always know where to begin .  The purchase process includes many stages and phases from the actual viewing of homes and finding the right one to making an offer to closing the transaction.  It is so much more involved than this and it takes being informed and educated about the process and hiring a good Realtor to represent you.

This series is designed to help inform and educate you about the  â€œ the Purchase Process” and this  first segment is about Financing because this really isthe first step towards your home purchase.  Unless you have $200,0000-$300,000 to plop down on a home or property, you will need to get financed.  By financed I mean apply for and get approved for a loan.  Once you are pre-approved for your loan you will then know what your price range is and are ready to begin the search for your home.  Having a pre-approval letter will help strengthen your offer when you do find the right home for yourself .  Once you find that home your Realtor will write up an offer for you which will include a Financing Contingency Addendum.  This tells the seller what type of financing you are using as well as protects you should your financing fall through.

Where do you start looking for a loan?  You can apply for a loan from your own bank, from a local credit union, or from mortgage brokers.  Your bank would be a good start since they usually have your financial history on file, but the key is to shop around .  Getting a loan is just like any other service or product, you want to find  the best program for you with the best rates for the best price. Yes, there is a charge for a loan amongst other fees (that's another discussion) and usually this is paid at closing as closing costs.  Upon being pre-approved for your loan, you will be required to submit numerous financial documents to the lender, i.e. pay stubs, tax records, bank statements, investment info.  The lender reviews all of this information to determine how much of a risk you are.  The higher your debt to income ratio, the more risk you pose as a lendee and thus the higher your interest rate will be.  If you prove to have low risk, you will have a lower rate.  That is how you earn your interest rate.

The entire process for getting the loan approved and ready for you to sign takes apprx. 30-45 days.  Most of this time is taken with compiling your file, appraisal and organizing the financial records in preparation for submission to the underwriters of this loan.  Underwriting is  the process of assessing the buyer, and determining the buyer's eligibility and then either approving or denying the loan.

Once you have been approved you can move forward to “closing” on the  purchase of your home.  The loan documents are signed by you, and then sent back to the underwriter once more for final approval.  Once the underwriter has given that last final review of the documents and approved, the funds are collected for the purchase, the deed is transferred into your name,  recorded by the county then you are the official homeowner.

Feel free to contact me directly at 360-303-3898 or roberta.soares@exprealty.com for more information on financing, if you need a lender referral or if you have questions about Bellingham Homes for Sale.

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