This Article Is On The Steps To Buying A House For First Time Home Buyers

Planting your roots with buying a new home is a big step for most anybody. The real estate transaction and obtaining a mortgage home loan can be a major bumpy roller coaster. This is a HUGE purchase. Most likely the biggest purchase you will ever make in your life and it will be the place where you will make the rest of your memories!  A home purchase is most American’s single largest investment in their life. The American Dream is owning your own home.

The home-buying process is one of the best memories you will have. Most first-time home buyers are intimidated at first. This is because most first-time home buyers do not know what to expect. It is not often people purchase homes. Understanding the home buying and mortgage process is the first step to buying a house. Set proper expectations. Know what to expect. Understand and get familiar with the steps of the mortgage process.

Ask a lot of questions to your loan officer. There is absolutely no reason to stress during the home buying and mortgage process. The home-buying process should be an exciting and fun process. Not a stressful process. We are publishing this article to ease the jitters for first time home buyers. We will emphasize and highlight the main steps to buying a house to prepare you for this memorable and exciting phase in your life.
In this article, we will discuss and cover the Steps To Buying A House. Buying a house is a process. It takes time. It is not like buying a car where you go to a car dealership and walk out with a car. By understanding the overall home buying process, home buyers will not stress and make the home buying process rewarding and exciting.

Understanding The Steps To Buying A House

A study was done and it shows how overwhelming this process may be:

• Some people cried in the process
•  Half the people had anxiety and were nervous throughout the entire home-buying and mortgage process
• More than 40% felt nervous and often had panic attacks
• For some families it caused arguments at home
•  Almost half of the people stated it was the most stressful event in life

I have been in the Mortgage and Real Estate industry since 1986.  I will agree with the above. However, there are many things you can do to limit the stress if not avoid it. Educating the home buyer and having them proactive during the home buying and mortgage process makes this an adventure and avoids stress. In the following paragraphs, we will discuss and cover on things you can do to streamline and avoid the stress during the home buying and mortgage process.

Getting Prepared To Shop And Purchase A Home

Understanding the process and getting prepared:

• A lot of the problem is people feel they don’t understand how things are done
• However by understanding the process you can feel much more educated about the process which lowers your stress
• You can speak to a loan officer and a realtor to get an understanding of the entire process
• If they can’t break it down for you then they are not the people you want representing you
• Interview several real estate agents and loan officers
• Do not just count on the referrals of a realtor and/or loan officer you get from family, friends, co-workers, and neighbors
• Do your own research
• Check on their online reviews of while vetting loan officers and real estate agents
• Talk to them multiple times
• See how punctual they are on returning emails, texts, and phone calls
• See if they work late evenings, weekends, and holidays
• Communication and accessibility is the most important factor in this process
• You need to feel comfortable with the loan officer and real estate agent

Once you have selected the person to represent you as your realtor and loan officer, the process has begun.

Steps To Buying A House: The Importance Of Getting Qualified And Pre-Approved

Get pre-approved before looking at ANY homes:

• Get all your paperwork together and review it before you hand it in
• You will need the last two years’ tax returns and every W2 that is included in those tax returns
• You will need bank statements
• Look at your bank statements and make sure you have all pages and you know what all the deposits are
• Gather your pay stubs for the last 30 days
• Then locate a loan officer that can give you a preapproval
• One that you trust and have built a relationship with
• Once you get a loan pre-approval then you can go shopping with a realtor to find a new home that you qualify for
• This pre-approval lets you know exactly what you qualify for
• This will also help reduce the stress
• Make sure you don’t switch jobs in the process of looking for and obtaining a new home
• Ask your loan officer if they can refer a real estate agent to you
• Interview a few of them
• See how punctual they are in returning calls, getting you a list of properties, and how familiar they are with the area
• Do not hire a part-time agent
• Make sure they are experienced
• Do your own online search of the real estate agent
• Check out their online reviews
• You need to feel comfortable with both your real estate agent and loan officer
• Do not hire the first real estate agent you meet

Once you decided on a real estate agent to represent you, the home shopping process has now started.

Shopping For A Home In The Right Location

Take time to figure out what you really want.

• Let the realtor know exactly what you want and where you want it
• Take your time finding the right home for you and your family
• Don’t wait until you are under an unrealistic timeframe to get this process started
• Make sure you know what type of home you want, how many bedrooms and baths you want
• What size lot and where in or out of town you want it
• How about the neighborhood?
• How is the school district?
• Does you subdivision children?
• How far are parks and other entertainment areas
• How is the crime rate

Once you have a house in mind that you want to make an offer, drive by the area. Check out the nearest shopping centers. How close is it to the expressways? How far away is the commute to work. Check out the neighborhood during the evening and weekends.

How Much House Can I Afford Versus Qualify

Be realistic about what you can afford:

• Your home shouldn’t be more than three times your yearly family income
• Look at your pre-approval
• Check your budget
• Include the mortgage payment in with your debts that you have
• Make sure you feel comfortable with this mortgage payment
• If you don’t then let the loan officer know you will need a pre-approval letter with a lesser sales price
• Lenders will pre-approve you on how much you qualify
• Lenders do not qualify you for how much you can afford
• Everybody has a different household budget
• Mortgage underwriters do not include debts that do not report on credit bureaus
• For example, utilities, childcare, education expenses, elderly care, entertainment, maintenance, fuel, and other personal expenses are not included when lenders issue a pre-approval letter

You are the only person who knows how much you can afford. You do not want to overextend yourself and buy too much house.

vExecuted Home Purchase Real Estate Purchase Contract

Once you find a home and the offer is accepted make sure you give the purchase contract to your Loan officer:

The loan officer will get your file ready and submit it to the processor. 

• The processor then gets it ready for the underwriter
• The mortgage underwriter is the person who is the one that measures the risk of your file against repaying the mortgage
• They are the ones that give you your approval
• Once the underwriter underwrites your file they will give you a conditional approval
• The file then goes back to the mortgage processor
• The mortgage processor gets together with the loan officer and go over the list of conditions from the conditional loan approval

The conditions are gathered so the mortgage processor can submit the file to the same mortgage underwriter for a clear to close.

Working On Conditions Of The Conditional Loan Approval For A Clear To Close

Working on the conditions from your  approval:

• This is basically a todo list for you, your loan officer, your processor, your realtor, the appraiser, and the Title Company to complete before you get the house
• You must do this quickly and efficiently so you don’t miss your close of escrow date on the home
• Once everything is received on the todo list the mortgage processor will submit the file back to the mortgage underwriter
• The mortgage processor will not submit the conditions piecemeal
• The processor will make sure that all conditions are complete, legible, have no missing pages, and labeled
• Gathering final conditions for a clear to close is one of the most important steps of the mortgage process
• The clear to close is the final step of the mortgage process
• A clear to close is when the mortgage underwriter signs off on the loan
• A clear to-close means the lender can start preparing the closing docs and the lender is ready to fund the loan
• If the conditions are turned in half-assed, the underwriter will kick it right back which will be in the back of all files
• This can cause delays in getting a clear to close and can possibly delay the closing

Once the mortgage underwriter reviews the conditions and items of the conditional loan approval, the underwriter will issue a clear to close. 

Many people do not know what goes on behind the scenes of the mortgage process. The mortgage process is a true process. It consists of many steps and stages. There are many support and operations staff behind the scenes of the mortgage process. It is a team of professionals that work together to accomplish the ultimate goal, which is clear to close. One of the most important professionals throughout the mortgage process is the mortgage processor. The mortgage processor is the quarterback throughout the mortgage process.

The mortgage processor is assigned to every borrower in the start of the mortgage process. Whether a lender is a mortgage banker, mortgage broker, FDIC Bank, or credit union, every lender has its own business model when it comes to the operations behind the scenes of the mortgage process. However, the general behind-the-scenes of mortgage process is similar for all mortgage companies.

Key Professionals Involved During The Mortgage Process Leading To The Home Loan Closing

 

Most first time homebuyers or borrowers who did not go through the mortgage process recently may not know the key players behind the scenes of the mortgage process. It is the team of mortgage professionals that make the home loan process leading to the closing possible. We will discuss and cover the key professionals in the mortgage process as well as their roles and responsibilities during the mortgage process. To start off with the first person borrowers will have contact with initially is their licensed loan officer. The list below will help you identify the parties involved and understand their roles and responsibilities.

Behind The Scenes Of The Mortgage Process: Key Professionals

The initial qualification and pre-approval step of the mortgage process is done by the loan officer. The loan officer will interview and qualify the borrower. They will take the mortgage loan application (1003), run credit, collect and review documents, and run the file through the automated underwriting system (AUS). Only after the borrower gets an approve/eligible per automated underwriting system and the borrower is fully qualified will a loan officer issue a pre-approval letter. Armed with a solid pre-approval letter, the borrower can hire a real estate agent and start shopping for a home. Once the homebuyer gets an executed real estate contract, the mortgage process officially begins.

How The Mortgage Process Begins

The mortgage underwriting and approval process begin when the borrower gets an executed real estate purchase contract. The time clock starts ticking once the homebuyer turns in the real estate purchase contract to their loan officer. The loan officer makes sure he gets all the updated documents and prepares the loan package for a mortgage processor to get assigned to the file. As mentioned earlier, the mortgage processor is the quarterback for the borrower throughout the mortgage underwriting and approval process.

The Importance Of An Experience Mortgage Processor

The experience and due diligence of a mortgage processor are of utmost importance if the borrower wants the loan process to go smoothly without any stress. Sloppy mortgage processors who turn in incomplete, not legible documents are one of the major reasons for delays in the mortgage process and delays in closing. Mortgage underwriters will kick back any file that has missing pages, are not legible, or is not properly labeled.

 

Every step of the mortgage process needs a professional that is in charge of the task at hand. The mortgage processor will do everything in their power to make sure the file is complete and ready for a mortgage underwriter to review, analyze, and issue a conditional loan approval.

Behind The Scenes Of The Mortgage Process: The Role Of The Loan Officer

The loan officer has a lot of responsibility in qualifying borrowers and issuing a rock solid pre-approval to those who qualify for a mortgage. The biggest reason for a last-minute mortgage loan denial is due to loan officers issuing pre-approval letters without properly qualifying borrowers. Loan officers should not be issuing pre-approval letters without thoroughly qualifying borrowers. Loan officers should carefully review mortgage documents, income paperwork, tax returns, and go through the borrower’s tri-merger credit report. Loan officers should thoroughly review and check for credit disputes and/or other potential reasons why the borrower may not qualify for a mortgage.

If there is doubt about a case scenario, the loan officer should get a second/third opinion prior to issuing a pre-approval letter. The loan officer is the borrower’s main point of contact during the mortgage process. The role of your mortgage loan officer is to keep you updated throughout the mortgage process. Your loan officer will work closely with your mortgage processor from the start of the mortgage process until the loan has closed.

The Role Of Processing Assistants And Loan Officer Assistants

Every mortgage company has its own way of doing business. Many top-producing loan officers who close many files every month often have one or more loan officer assistants. Some mortgage companies like Capital Lending Network, Inc. have loan officer assistants who have licensed mortgage loan originators and have years of experience as mortgage processors.

Other lenders may have loan officer assistants who are not licensed and only trained as clerical support personnel. The role of a loan officer assistant is to assist a loan officer they are assigned to exclusively or to assist a team of loan officers. A good analogy is to compare the loan officer as a medical doctor and the loan officer assistant as a nurse. Loan Officer Assistants are also referred to as LOA.

The loan officer assistant assists the loan officer with time-consuming tasks so the loan officer can concentrate on sales and generate more business. Borrowers will have a lot of communication with the LOA during the mortgage process. The LOA normally assists the loan officer in collecting documents from the borrower and getting the file ready for the mortgage processor. After all, documents are signed by the borrower and the paperwork is submitted, a mortgage processor is assigned to the file and takes over.

The mortgage processor may have processing assistants to assist them as well. Both the LOA and the mortgage processor works as a team in reviewing all documents prior to submitting it to underwriting. Some lenders will have the mortgage processors request conditions after the underwriter issues a conditional loan approval. However, other lenders will have the processor request it from the loan officer and/or LOA and the loan officer or LOA will request it from the borrower.

Role Of The Mortgage Underwriter

The mortgage underwriter is the decision maker of a mortgage loan applicant. The loan officer will qualify and pre-approved mortgage loan applicants. The mortgage processor is the professional that prepares a borrower’s documents the mortgage underwriter needs to make a qualification and approval decision. The mortgage processor will make sure all paperwork is complete, legible, has no missing pages, and is properly labeled.

Mortgage underwriters will not waste any time if any documents are not legible and/or missing. Underwriters will kick back the file to the processor if the file is not clear and/or properly labeled. This is why it is very important the mortgage processor takes their time and does not submit any files that are not complete. The cooperation of the borrower is very crucial in making the processor’s job easier so the mortgage process goes smoothly.

Underwriting Process

Once the mortgage processor feels the file is complete, it is then submitted to underwriting. A mortgage underwriter is assigned to the file. Mortgage underwriters will thoroughly review and analyze the borrower’s credit, credit scores, payment history, income, assets, and liabilities, and make sure the borrower meets all agency mortgage guidelines and the lender’s overlays. The mortgage underwriter has a lot of power and discretion in issuing and/or denying a loan applicant.

If the mortgage underwriter feels the borrower meets all the qualification requirements, the underwriter will issue a conditional loan approval. Conditional loan approval is once the borrower submits all conditions listed on the conditional loan approval, the underwriter will issue a clear to close. A clear to-close means the lender is ready to prepare closing docs and fund the loan.

Closing And Post-Closing

The closing is the finish line of the mortgage process. Once the mortgage underwriter issues a clear to close, it is now the job of the team at the closing department to prepare closing docs and set a closing time and date. A closer is assigned to a borrower’s file. The closer prepares the closing documents the title company needs.

The closing documents will outline the final details of your loan, including the amount, interest rate, term, and closing costs. Borrowers need to get the final closing disclosure at least three days before the scheduled closing date so you have time to review it. The closer closely works with the title company in going back and forth with figures to get the final figure and the funds to get wired. Once the loan has closed, ownership changes hand officially.

The title company will record new ownership and file other paperwork. Once the loan has closed, the lender will have the team from its post-closing department prepare the funded closed loan to sell it on the secondary mortgage market. The investor who purchases the funded loan will retain the mortgage servicing rights. The investor that purchases the funded closed loan by the lender will package up more loans and resell them to a larger financial institution such as Fannie Mae and/or Freddie Mac.

The Home Closing

The Home Closing:

• The home closing is the final step of the home-buying process
• The home closing takes place at the title company chosen by the sellers
• You will sign all kinds of legal documents
• The note is a legal document that tells you repayment terms and the Deed transfers the title to you
• The lender will wire the funds to the title company after all parties have signed the proper documentation
• The money will be distributed to everyone involved in the transaction
• Once you sign these documents you will then fund
• The title company will record the deed and all other important paperwork immediately which takes approximately 48 hours to finalize on public records
• At this time you will get the keys to your new home

It is at the home closing where ownership changes hands. The home is no longer the seller. You are the official owner of the home.