By: Chris Klau
The following question is one that we get often at Quizzle.com, the free and easy way to manage your home, money and credit – all in one spot. To give you the best possible answer, we’ve brought in Home Loan Expert Chris Klau.
Chris has nearly 10 years of experience in the mortgage industry as Director of the Mortgage Insiders at Quicken Loans and works hard every day to provide trusted advice and home loan expertise to team members, friends and family, and external partner companies.
Q: I’ve found my dream home… Now what?
A: Congratulations! It’s often times easier said than done to find the home of your dreams, so it’s a very exciting time when you do.
To make sure you end up living in your dream home instead of just dreaming about it, it’s important to understand what happens next:
Assess Your Current Living Situation
Are you currently renting? If so, when does your lease end? Do you own a home right now? If you do, is it up for sale, sold or are you planning to keep the home to rent out or as a second home? These are just a few of the questions you should consider about your current living situation.
You may be able to negotiate timing with the home seller, your landlord or your home buyer. And you’ll want to make sure that you set up your budget accordingly.
Get Pre-Approved for a Home Loan
Now that you’ve taken your current living situation into consideration and decided you’re comfortable moving forward with the purchase of your dream home, the next step is to make sure you secure a mortgage pre-approval. If you skip this step, you may end up getting your hopes up only to be turned down on the financing side.
To secure a quality pre-approval, contact a trusted home loan lender (i.e. a referral from a friend or family member, or the preferred lender of your workplace). A mortgage banker will review your credit report and credit score, obtain preliminary information about your current housing situation and the home you’d like to purchase, and get a snapshot of your income and asset positions.
With this information, your Home Loan Expert will determine if you’re qualified for the necessary financing to purchase the home and give you an idea of what that financing might look like (i.e. general idea of rates, costs, payments, etc.). Most importantly, a mortgage pre-approval will provide confidence to you, the home seller and any realtors involved that you’re able to secure the financing necessary to purchase the home.
Make an Offer on the Home
After you obtain a home loan pre-approval and you’re comfortable with the general outline of how things will work, the next step is to make the offer on your dream home. This is another piece of the home buying puzzle where having a trusted professional to work with is key.
An experienced real estate agent will help you determine what amount to offer the home seller depending on your situation, how long the house has been on the market and the willingness of the home seller to negotiate. Need help finding a top-notch real estate agent? Consider getting a Real Estate Matchmaker.
Provide Documentation to Your Mortgage Lender
Assuming the seller of the home accepts your offer, you’ll next want to reconnect with your lender. Your mortgage banker will begin to verify all of the information you provided for your pre-approval so he can fully approve you for the loan. You’ll be asked to provide more detailed documentation, such as pay stubs, tax returns and bank statements. (Learn more about what documents you’ll need to get ready to ensure a smooth home loan experience.)
You can secure home financing once you’ve signed the home purchase agreement. Your mortgage banker should discuss with you the different home loan programs that are available and provide his recommendations of what program is best for your personal financial situation and goals. Once your banker sets things in motion, you’re about two weeks to five weeks out from closing on your dream home.
Finalize Your Home Loan
Next, your mortgage lender will order the appraisal, title work and other third-party items that are needed to close your home, as well as coordinate the timing of the home loan process based on the closing date specified on the purchase agreement.
Your lender will also verify all of the documentation you’ve provided to ensure you’re fully qualified for the home loan. Provided you’ve been upfront and honest with the information you’ve given the lender, and there hasn’t been any changes to your situation or to mortgage guidelines since your pre-approval, this should be merely a formality. If your situation has changed, make sure you work closely with your lender to ensure the process continues smoothly and your full approval is intact.
Along the way, your lender should keep you posted on the status of your home loan and help you get ready for the closing. Your mortgage lender will confirm the final terms of your loan and the amount of money needed to close the loan. Finally, provided everything goes as planned, you’ll head to the closing and get the keys to the hom
e of your dreams… And that’s when the real dream begins!
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