An independent mortgage lender explains what you need to know.
Nutshells don’t get any bigger than this one, since a house is likely the biggest single purchase of your life. In fact, the average American buys only three homes in a lifetime, so it’s not something you do every day. Throw in the recent changes required by the government, the state-by-state differences and the number of people involved in a single purchase, and the home buying process becomes an incomprehensible mess.
GoPrime Mortgage, Inc. . (dba PrimeRate Mortgage Lending), an independent mortgage lender, understands how confusing the whole home buying process can be. And if you’ve never bought a house before — if you’ve never been through it even once — buying a house can seem as frightening as public speaking.
A Lot at Stake
When’s the last time you threw down 190 grand to buy something? Probably never, since most of us don’t have that kind of pocket change. And yet, the median home price in the U.S. is $188,900. Of course, depending on the location and size of the property, you can find something for a lot less, but the right home for you is still probably going to cost you more than what you make in a year.
You have a lot at stake when you buy a home. You’re taking on a new risk. Your credit rating is on the line. And you have to move, which is one of the biggest stress-inducers in the world, right after the death of a loved one and the pain of divorce. So when you buy a house, you want to get it right. You don’t want to have to do it again for at least several years and maybe not for another 20.
The Home Buying Process Overview
This independent mortgage lender wants to help so you understand what to expect. Even before you decide to buy a house, you need to start collecting the documents and information you’ll need. Ask questions along the way and do your homework. In general, here’s the step-by-step process you’ll follow for buying a house:
- Decide you’re ready to buy a house. It’s a big decision to make.
- Find out what you can afford. Get pre-qualified by an independent mortgage lender.
- Interview real estate agents to find one who listens and answers your questions.
- Go house-hunting. Review what you see to refine your search.
- Find the house you want to buy. Make an offer on it.
- Negotiate the price, if necessary. Seal the deal.
- Close the loan, get the keys and move in!
It may look simple here, but each step can be full of complications and delays. To help you along the way, you need allies, some professional partners you can rely on:
- A lender, such as an independent mortgage lender, to loan you the money
- A real estate agent, who knows the local process
- A lawyer, who helps complete title work and conducts your closing
- A home inspector, who evaluates the structure before you buy
Step 1: Make the Decision to Buy
Before you decide to buy, review your finances. Do you have some money saved? Is your credit score acceptable? Is your income stable? Are your bills under control? Favorable financial footing will help you get the loan you need to buy a house.
If you’re tired of renting, that may be enough. When you rent, you’re putting money into someone else’s pocket. When you buy, you put money (called equity) into your own pocket.
Step 2: Get Pre-Qualified with an Independent Mortgage Lender
Talk to an independent lender to get pre-qualified. It involves a credit check, a review of your financials and a calculation outlining your debt and income. The result gives you an idea of how much the lender will let you borrow. Since pre-qualification is non-binding, though, getting pre-qualified is only the minimum step.
It’s better to get pre-approved. While pre-approval requires more paperwork and takes more time, it results in a commitment to loan you up to a specific amount. With a pre-approval, you know exactly how much you can afford. Pre-approval also gives you an advantage when you finally make an offer (see step 5).
Step 3: Find a Realtor
Every real estate agent, even those at the same firm, is unique. Talk to many agents. Interview them to find one you like who gives you straight answers to your questions. An independent mortgage lender can work with many different Realtors.
If you find one that listens to your needs and concerns, make sure you communicate your desires fully. Your Realtor not only shows you houses for sale, she guides you through the process and helps you make an offer. You should feel like you can trust your agent.
Step 4: Shop for Houses
Keep your Realtor on target. If you’re shown a house that doesn’t suit your needs at all, tell your agent. Make sure you’re all on the same page. With your pre-approval from an independent mortgage lender, you’ll know what price range you’re seeking.
Limit the number of houses you look at to five per day. After each viewing, make a list of what you liked and didn’t like about the house, including its curb appeal, its size and its location. This way, you won’t be confused when you review what you’ve seen.
Step 5: Make an Offer on the House You Want
When you find the house that comes closest to matching all your needs and desires — you may never find that “perfect house” — get ready for the excitement. With your Realtor’s help, draw up an offer on the house. A real estate agent who helps you with this phase is called a buyer’s agent. She’s on your side, representing your interests.
In the offer, include the price you’re willing to pay, which may be less or more than the asking price. You may want to offer more if you really like the place and you know (or suspect) other people are making offers as well.
Step 6: Negotiate the Price
Sellers aren’t required to accept your offer. They can make a counter-offer. In this way, you negotiate, through intermediaries, to reach an acceptable compromise. Because you got pre-qualified or pre-approved, you know how high you can go with your offer before you have to pull the plug.
This process can be nerve-wracking, but if you have a trusted real estate agent, you’re in good hands. Always keep the end result in mind. Is the house you’re negotiating for worth the monthly mortgage payment? Will it increase in value? Some things you can never know for sure. Do your homework!
Step 7: Close the Loan
Between the time that your offer is accepted and you seal the deal and get the keys, a lot has to happen. It can take two weeks or several months. That period is called escrow, and as any independent mortgage lender will tell you, the only good escrow is a closed escrow.
If you’re only pre-qualified, this period is when your independent mortgage lender works to get you the loan. If you’re pre-approved, you’ve already done the hard work. Either way, the financials have to be put in order.
This is also the time when you have the house inspected, to make sure everything works as expected: electricity, plumbing, appliances, fixtures, structural integrity… you don’t want any surprises after you take possession. If problems are discovered, you can negotiate a price break, insist on repairs or walk away.
Finally, on Closing Day, you sign the loan documents with a lawyer and get the keys. Prime Mortgage Lending of West Asheville lives by its motto: To close on time, every time. You too can have that kind of assurance when you do business with an independent mortgage lender.
If you still have questions about the home buying process, contact Zachery “Zack” Adam of GoPrime Mortgage, Inc. . (dba PrimeRate Mortgage Lending).