And How Your Mortgage Lender Can Help You Get a Home Loan
Now is a great time to buy your first home! Why? Because the sooner you get into your home, the sooner you can embrace this big, important step in life and continue chasing down your goals.
There are two very important key players in the home-buying process: your real estate agent and your mortgage lender. Get good ones, and buying your first home will be smooth sailing. Here’s what you can expect from your real estate agent when it’s time for you to find your very first home.
Selecting a Real Estate Agent After You’re Approved for a Home Loan
Before beginning your search for a new home, your first action item is to get pre-approved by the mortgage lender of your choice. To get the best mortgage interest rate, you might choose to shop around at a few lenders to see what they may offer you. This fall is a great time to get pre-approved and research interest rates; interest rates have been falling this year, so it’s likely that if you’re well-qualified, you’ll be approved for a mortgage with less than 3 percent interest.
After you’ve received your pre-approval letter, it’s time to choose a real estate agent who will work for you and represent your best interest as you buy your new home. Home-buyers take many different approaches when it comes to finding the agent who is right for them. Some people ask their friends and family members for their recommendations, while others turn to the internet to read reviews of agents before making their decision. Others choose at random.
Regardless of how you find your agent after getting approved for a home loan, you want to make sure that your personalities are compatible, and that you are both clear about each others’ expectations.
Meeting with Your Agent
The first time you meet with your agent, you may go take a tour of a home for sale, or you might just sit and chat over coffee and get to know each other. Expect your agent to ask you questions about what you’re looking for, how much you want to spend, and what your deal breakers are in a home.
This is your chance to be specific! Everything you tell your agent will guide how they work for you at every step of the way in the home-buying process. It is helpful if you make a list and prepare for your conversation in advance, so you don’t forget anything important.
When you first meet your agent, bring along your pre-approval letter from Homestead Financial Mortgage or other institution, so that they know you are serious about purchasing a new home. At this time, your real estate agent may give you access to MLS listings as they become available, through a special application. Ask your agent how they prefer you tell them about homes you’re interested in seeing. Do they expect you to search the listings and select homes to see? Or will they take a more proactive approach and compile lists of homes they think you’d like? (In this modern era, many agents you meet with may assume that you’ll send them addresses of the homes you’d like to tour.)
Looking at Homes for Sale Near You
When it’s time to go see the houses for sale in your area, your agent will accompany you on every showing. Before you visit the home for sale, your agent will verify that it is still available and review the disclosure form that the sellers provided so they can answer any questions you have.
While you look through every room in the homes you visit, your real estate agent may point out things to consider in the house – such as potential things that may come up on a home inspection, or anecdotal comparisons to similar homes on the market or those that have just sold. Take the time to look closely at all elements of the house. Keep in mind anything that you will want to update or remodel; consider taking careful notes about the condition of the home so that when it’s time to choose a home or condo to make an offer on, you are prepared to submit your absolute highest and best.
Making an Offer on a Home
When it’s time to put in your offer on a home for sale, your agent can help you assemble one they think has a great chance of being selected. Because we’re currently in a seller’s market in most areas of the country, you may be facing lots of competition. A smart agent can use what they know about the house and its history – whether it’s been listed before, what the disclosure says, and more – to help you craft your offer.
Don’t forget that the asking price of the home isn’t necessarily what it will appraise for in today’s market. Many homebuyers are offering well above asking price and forgoing requesting that the seller pays closing costs in an attempt for their offer to be accepted. However, that does not mean that you have to throw out your budget! You will find a home that not only meets your needs, but is in your price range.
Should you want the seller to pay closing costs for you, most agents will recommend that you offer additional money through your home loan to cover the closing costs, so the seller isn’t paying out of pocket. For example, if you are approved for an FHA loan from Homestead Financial, you can ask the seller for up to 6 percent of the purchase price for your closing costs. For a conventional mortgage, you can ask for up to 3 percent. Therefore, if you are making an offer on a $100,000 home, but want the seller to pay your FHA closing costs, you might offer $106,000; if you want the seller to pay closing costs for your conventional loan, you might offer $103,000.
However, the offer you assemble is completely up to you. Your agent can give you advice on making your best offer, but it is ultimately your decision.
Working with the Mortgage Lender and Title Company to Close
Congratulations! Your offer was accepted! Your journey to owning a home isn’t over quite yet. You’ll now need to schedule an inspector to check out the house you want to buy and let you know if there are any issues you should be aware of before proceeding with the sale.
When you get your inspection report back, you and your real estate agent can discuss your options for requesting repairs; your agent will act as your go-between to the seller to help strike a deal. When your inspection is complete, and the contract is signed, you’ll mostly need to be patient.
During this time, your mortgage lender may ask you for documents to help them close on your home loan, such as pay stubs, proof of income, bank statements to disclose your cash assets to verify you can complete the purchase of your home, and more. Your mortgage lender will directly ask you for these things; your agent will not be privy to this information.
When it’s time for the appraisal, your agent will also serve as your go-between and will share the appraiser’s documents with you. If the house you’d like to buy appraises at or over the purchase price you’ve agreed upon with the seller, the sale can proceed as planned. If it appraises at less than the sale price you’ve negotiated with the seller, you will need to:
- Pay the difference between the appraised value and the sale price in cash or
- Work with your agent to renegotiate the sales price with the seller and their agent.
Once your final purchase price is negotiated, the title company working with your real estate agent will contact you and provide you with all the details you need to attend your closing and sign your paperwork. After you’ve completed a walk-through of the home with your real estate agent, the paperwork is signed, and you’ve provided your down payment and any other costs via a certified check, your new home is all yours! Take the keys and head home to your new pad and get settled in!
Get Pre-Approved by Homestead Financial Mortgage
Serving ten states in the midwest and southeast regions of the United States, Homestead Financial is the mortgage company you can trust for your next home loan or refinance. Getting a home loan is much easier than you think; at Homestead, we’ll outline all your options and help you make an informed decision about the type of loan you’d like to take out to buy your first home.
For decades, residents of Missouri, Illinois, and Kansas have turned to us to help them take the first steps to home-ownership freedom. If you’re ready to look for a home of your own, contact us online to get started on the pre-approval process.