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Top Five Milestones In The Home Loan Process

First time home buying can be stressful if you do not know what to expect. Fortunately, the dream of owning property can get you through the process. After all, millions of other homeowners survived the first purchase.  With the right information and guidance, you can get your dream home as well. If you are anticipating buying your first home, here are the major steps of the home loan process.

Getting Prequalified

Prequalification is the process of getting a preliminary home loan evaluation prior to the search for a house.  While it is possible to begin the housing search without getting prequalified, it is not recommended. Proof of prequalification is a sign to real estate professionals that you are a serious potential buyer.

Proving that you are financially ready to purchase can sometimes enable you to negotiate a lower housing price. It also provides guidance as to a potential budget, so you don’t waste time with properties outside your price range.

The Process Itself

The prequalification process is incredibly simple.  They are typically offered free and do not require a commitment to purchase. In most cases, the process takes about 15 minutes, and can be completed over the phone, in person, or online.

In the days after, you will receive a letter indicating the maximum amount you could borrow, and the monthly payments at that level of the loan.

Considering USDA Loans And Other Affordable Housing Programs

The USDA offers a number of programs to make housing affordable to people in rural and certain suburban areas. There may be restrictions related to income.

If you live in the relevant jurisdictions and are interested in these programs, the prequalification process is the time to begin asking questions.  You may find a program that can reduce your overall cost or improve your terms.

The Actual Loan Application 

After the prequalification process and housing search, you will hopefully find a home you would like to buy. You will then negotiate with the homeowner through your real estate professionals.

If the owner agrees to your offer, you will then need to file an actual application for a loan.  The application will require documents to prove current income and assets.

Loan Processing 

After you submit your documentation and application to the loan officer, the financial institution will begin its internal processes.

The loan officer will check the submitted paperwork for errors or other problems. They will also secure and verify title information, credit reports, and other documents as necessary.

Underwriter Approvals

Although the loan officer will continue to serve as your primary contact, underwriters actually make loan decisions. The underwriter will review the complete loan application and make sure your details match any internal guidance on loan creation. Once the underwriter is satisfied, the application for the loan is approved.

Closing

During the three days prior to your closing date you will have the opportunity to review your closing disclosure. The disclosure indicates the final terms of the loan, including the total amount, closing costs, and monthly payment. The closing itself is the official exchange of signatures, funds, and door keys!

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