Home ownership is the “Great American Dream” …it also happens to be one of life’s greatest stresses. However, if we pay attention to these simple 9 steps, we can maximize the “Dream” part while minimizing the “Stress” part of the process. Over the next series of articles, we will cover the necessary steps to buying a home.
This is part two of our three part series. Read part one here.
5. Making your mortgage application
Now that you have an accepted contract, it is important to quickly make your mortgage application. While you have gone to your licensed mortgage loan officer already for a pre-approval, you will now need to make application for your mortgage, if you have not already. Make sure to have your standard documentation ready.
This includes:
ID’s, 2 most recent paystubs, w2’s, tax returns for the last 2 years, and the source of your down payment(Bank Statements, 401k). If you are using gift funds from a family member, make sure to document the source of the gift.
During the application process, make sure to make a list of all of the questions you will have regarding the financing, make sure the payment is what you expected as additional information comes in, like taxes and insurance.
Remember, for most of us, this is the largest financial transaction we will make in our lifetimes, so make sure you take your time during this step. If, for any reason, you don’t understand something regarding the terms of the mortgage, make sure to slow everyone down, until you understand everything.
6. Inspections for the Home
At a minimum, we recommend getting a home inspection. These should be performed as quickly as you can after the contract is accepted. A home inspector’s job is to check the soundness of the home.. For example, they will check the roof, basement, HVAC, plumbing electrical and overall structure of the home. The building inspector should not be confused with a real estate appraiser, who’s primary job is to render an opinion on value.
The inspection will prepare a report, recommending certain aspects of the home be addressed by the seller in order to move forward. For example, the roof needs replacing, parts of the HVAC should be addressed. The seller will have the opportunity to respond to the inspectors recommendations.
It is important to note, a building inspection is different from an appraisal, which is performed by a licensed appraiser, usually during the next step, “processing the mortgage” and determines the value of the home being purchased
If the seller’s parties and the buyers parties can come to terms on the resolution of the items noted in the building inspection, this is usually the last place the transaction could wind up falling through.