1. Stay on top of your credit score

Because very few of us are able to purchase a house with just cash, most people will need to apply for a mortgage loan. While there are government backed loans, like FHA or USDA loans, that allow a minimum of a 500 FICO score, the majority of conventional mortgage loans are based on the borrower's credit history. This means the better your credit score, the more favorable  the loan terms and interest rate.

4. Gather down payment and closing costs

In today’s market, it is not uncommon for buyers to put 20% down. However, lenders do permit homebuyers to contribute must less. Contributing less than 20% of the mortgage to the down payment may mean incurring higher costs and additional fees, like mortgage insurance. But even a small down payment can be hefty. For example, a 3.5% down payment on a $500,000 home is $17,500. So it's important to determine what your down payment options are based on the type of loan you qualify for.  
 
Here are the most common loan types:

• Conventional mortgages conform to standards set by the government-sponsored entities Fannie Mae and Freddie Mac, and require as little as 3% down. 

• FHA loans are insured by the Federal Housing Administration permit down payments as low as 3.5%.

• VA loans are guaranteed by the Department of Veterans Affairs sometimes require no down payment at all.

 Whatever the case, the recommendation is to begin saving for a down payment as early as possible.

5. Get pre-approved by a certified lender prior to looking

For purchases that involve loans of any amount, the pre-approval letter is an integral part of the offer submission packet. Getting pre-approved by a certified lender is imperative and needs to take place prior to looking for a home. Be prepared to provide income verification documents, such as pay stubs, income tax returns, bank statements, and even employment verification where relevant.

7. Start shopping – search and submit a purchase offer

As previously stated, buying a home can be an overwhelming and emotionally draining  process. If the loan pre-approval process did not prove stressful, the search and offer submission stage certainly may. Finding the right home is not always an easy task. Schedule a maximum of 4 - 5 homes at a time, because any more than that will make your head spin.
 
Your agent’s ability to package the purchase offer based on your qualifications and down-payment play a significant role in the competitiveness and ultimate acceptance of the offer. Knowing market/area trends and when to push for concessions can make the difference when multiple offers are being considered by the seller. 

8. Offer acceptance and opening escrow

A fully executed purchase agreement is generated once your offer is accepted. The executed agreement is then sent to an escrow company (usually of the seller’s choice). So begins the escrow process. 

In California, purchase and sale closings are handled by escrow companies. In other states, this process may be completed by closing attorneys. Escrow companies are licensed by the State of California and are intended to serve as an unbiased transaction mediator — holding all of the parties to the agreed upon terms. The escrow process also includes confirming clear title on the subject property. 

10. obtain an appraisal

Simultaneous to the home inspection being conducted, the lender will order an appraisal. It is in the best interest of the listing agent of the property to obtain an appraisal amount that is at (or close to)  the listing price. However, you (the buyer) will be responsible for the cost of an appraisal. 

12. Loan funding and closing (escrow) on your home

Once terms of the deal are confirmed and the underwriting process is complete, your loan documents will be sent to escrow for signing. Upon return of the signed documents, the lender funds the loan. Days later, approximately 1-3, escrow closes and you are a NEW HOMEOWNER!

Are you ready to purchase a new home? Click below to contact us.