As a prospective home buyer one of the first things you should do is to speak with a mortgage representative. When interviewing lenders try to find someone who takes the time to explain things and that you feel comfortable working with. They should be prompt in their responses to you because they will be helping you and your agent to move the application through to closing. It is easier to work with a local lender or a lender with local representation because they will know local values and practices.
Your lender will tell you how much they will lend you for the purchase of a house. This is based on income, funds available for down payment and closing costs, and your credit rating. The lender will tell you how much house you can afford. It is absolutely vital that you ask what your approximate monthly payment will be based on principle, interest, taxes, PMI (if required) and homeowners insurance. Many of the buyer's I have worked with over the years have been surprised to find out that the total payment per month was higher than they expected and in some cases higher than they can afford.
Once you have identified the house you want to buy and have negotiated the price, contact the lender you have chosen. Your Buyer's Agent can provide them with details of the house. You can start the application process. Be sure you get a Truth in Lending Statement that will outline the estimated closing costs that you will have to pay. The lender will provide you with a list of items that you need to gather to support your stated income and funds available for down payment and closing. They may also ask for documents and explainations of certain items that they find in you credit report or to qualify you for the program that you are applying for.
The next step varies by location and common local practices. In my area of New York state the seller's attorney will write up contracts and send them to the buyer's attorney. The buyer will then sign contracts and return them to the seller's attorney along with down payment funds to be held in the seller's attorney's escrow account.
After you have fully executed contracts, the lender will order an appraisal of the property. This may be included in your closing costs or you may have to pay up front for it. The appraisal will tell the bank that the property is worth the amount they are lending you to purchase it.
The lender will have someone looking over the whole application who is called an underwriter. The underwriter will review the application to ensure that all the items needed to support it are complete. The underwriter is the person who will clear your loan to close and inform the attorney to schedule the closing.
One thing I always stress to my buyers is to avoid spending a large amount of money at any time during the application process. Don't go out and buy a new car, make a lot of purchases using your credit card, or even take a large amount of money out of the bank for any purpose. Your loan approval is based on not only the value of the house but on your ability to pay your monthly expenses. If you add to your debt load or reduce your savings you will affect your ability to borrow money. The lender will recheck your credit and bank statements just prior to closing so please be careful. If you need appliances or furniture wait until after the closing to get them.
Working with your lender is one of the things that a buyer's agent will help you with. You need someone on your side to help you through this.
If you are looking for a house in New York's Orange, Ulster, or Sullivan Counties I would love to work with you. If you are looking anywhere else I will be happy to refer you to an agent.
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