Your Ultimate Guide to the Home Buying Process Part 2
In our last blog post, “Your Ultimate Guide to the Home Buying Process Part I,” we discussed what steps homebuyers can expect to take during the initial stages of the home buying process.
Once you find the right house and have your offer accepted, you’re one step closer to sealing the deal on your dream home. However, before the house keys can be handed over, there are some additional steps homebuyers need to take to ensure a seamless transaction.
Schedule a home inspection
Even though a property may be pleasing to the eye, structurally it might require repairs. For this reason, you’ll want to hire a licensed home inspector to examine the house. Although home inspections aren’t required for purchase, we strongly suggest that you do not buy a home without a private inspection. To find a qualified home inspector in your area, ask your realtor for a referral.
Formalize your mortgage application
Once you are satisfied with the home inspection, your next step is to schedule an appointment with your lender to formalize your loan application. During this appointment, your lender will go over the specific details of the purchase, including mortgage payments, interest rates and closing costs. Upon completion of the loan application, your mortgage lender will begin verifying your data and incorporate collateral (the house) into the mix.
When you purchase a house it is used as collateral for the loan. Therefore, lenders will need to make sure the collateral is sufficient to support the amount of money you are borrowing. This means an appraisal, title work and various other measures will need to be taken to insure the home’s value is adequate to secure your loan. This process typically takes about 30-45 days and depends on your loan type, as well as the volume of loans in your area.
Purchase homeowners insurance
During this time you will also need to secure homeowners insurance and inform your lender of your policy. Homeowners insurance ensures you are protected from any losses that could occur from natural or other disasters and is mandatory for all mortgages. Depending on where the residence is located, it may also be necessary to obtain flood, hurricane and/or earthquake insurance.
Schedule a closing date
Once your loan is approved and your file has been cleared by quality control and underwriting departments, your lender will work with you to schedule a closing date. At the time of closing, you will be provided with a document that details the fees associated with the purchase. You will also need to have the appropriate funds wire transferred or bring a cashier’s check to the closing table. You can also expect to sign several documents and, depending on the seller’s situation, obtain the keys to the house. If you don’t obtain the keys at closing, the seller will have to pay you “rent” for any days they remain in possession of the home beyond the closing date (this will be based upon your new house payment).
While the process of purchasing a home may seem complicated, it is not as daunting as most people think. By following this simple guide, you’ll be able to navigate the home buying process with confidence and ease.