So you are considering buying a house, and are either a First Time Homebuyer or haven’t purchased a home in a few years. What should you expect?
Those of you who purchased a home 15+ years ago, might think its still the same process. Heartbeat – Check, ability to fog a mirror – Check, here’s your new loan. A few things have happened since then that have changed the landscape of lending. Housing market crash in 2008 – Check, Recession – Check.
On the other hand, getting a mortgage is not as hard as some people make it sound. It all boils down to one thing……your Loan Officer. Your loan officer will be the person helping you navigate the treacherous waters surrounding the lenders castle. If you are considering buying a home in the Little Miami School District (Maineville, OH /Morrow, OH area) or anywhere in Ohio you can always contact T.C. Strait | Lynx Financial Group Loan Officer
In general, here are the steps that I take when talking to a new client who is in the market to purchase a home:
1. Discuss goals
Are you planning on raising a family in your new home? Do you plan on upgrading in 2-3 years? Is your goal to purchase another home in 2-3 years and rent out the home you are currently buying? Or is your goal of buying a house something else? Your goal in purchasing a home will play a big role in determining the best type of financing. Of course things change. Life happens. A good loan officer will be able to advise you as your goals change.
2. Application
Complete the standard mortgage application (1003). Your loan officer can generally go through the application with you on the phone in 10 minutes or you can complete it online at your leisure. Here is a standard application if you’d like to review it: MORTGAGE APPLICATION
2. Credit
The dreaded credit report. The majority of lenders have minimum credit scores that they will approve. Your loan officer will know what lenders are OK with what credit scores. The widely accepted minimum credit score is a 620, although there are lenders that will lend with lower scores. If you don’t meet the minimum a good loan officer will help you develop a game plan to help you get your credit scores up in the shortest amount of time.
3. Debt to Income Ratio
Now that the loan officer has your application and credit report, he/she can calculate your debt to income ratio. An acceptable debt to income ratio is somewhat subjective, as most lenders will require that your mortgage file be submitted to one of the Automated Underwriting Systems (AUS), which will determine if your debt ratio is acceptable. In general, a debt to income ratio of 43% or less is ideal.
4. Discuss Options
At this point your loan officer can discuss what options you have available that meet your desired goals. Loan programs (Conforming, FHA, VA, USDA), interest rates, closing costs, etc.
5. Find a Home and Make an Offer
You’ve now been Pre-Qualified or Pre-Approved. You know what options you have, your loan officer can give you fairly accurate payment information for different properties, so now its time to find a home and to do that you’ll want a real estate agent. Your mortgage loan officer can refer you to someone they trust. You are one step closer to buying a house!
6. Submit Paperwork
Once you’ve got an executed contract on a home, you will need to submit your income and asset documentation (if you haven’t already) to your loan officer along with any other items that he/she requests (copies of drivers licenses, divorce decree, etc, etc.). Your loan officer will generate the preliminary loan disclosures which will need to be signed/dated.
7. Loan Officer Submits Your Loan to the Lender
After your Loan Officer has all of your documentation, signed/dated preliminary loan disclosures, and a copy of the legible, executed purchase contract he/she can now submit your file to the lender. This is the point and time that you can start thinking about locking your interest rate.
8. Lender Issues a Conditional Approval/Commitment
The lender, after reviewing your mortgage file, will issue a Conditional Approval. Basically, they are saying “We like what we see, but here is a list of items that we still want”. At this point, or possibly when the loan was submitted to the lender the loan officer will order the appraisal. He/She will also request any additional documentation from you.
9. Lender Issues a Clear to Close
After all of the outstanding conditions from the Conditional Approval are submitted to the lender, the lender will once again review the file. Assuming that the documentation that was submitted was sufficient to meet the lenders request, the lender will then issue a Clear to Close. Now its time to talk about when and where you want to close.
10. Close Your Loan
Warm up that writing hand, your going to be signing a lot of paperwork. Congratulations, you’ve come to the last step of buying a house!
Obviously these steps are simplified, and many different things can pop up along the way. That is where a seasoned Loan Officer can come in handy. A good loan officer can spot potential problems before they arrive and plan accordingly. You can contact T.C. Strait / Mortgage Loan Officer to discuss your personal situation.
