Hombuying 101: An in-depth analysis of the homebuying process
71Hombuying 101: An in-depth analysis of your role and the role of the mortgage broker, real estate agent, title company, sellers and all other interested parties including the mother-in-law.
I am posting this because I have seen a lot questions on www.trulia.com that make me believe that there are a lot of people who need help learning about the home buying process. There are a lot of government and neighborhood programs that try to educate the public but I think there should be more. I am trying to write this as if the reader doesn’t know anything about the process, If you are an expert please understand this is not for you but I would appreciate any input you might have.
The first step once you have decided to purchase a home is to get your finances in order. If you have any bad debt, take care of that. You can find out by going to www.annualcreditreport.com from there you can get information from all three major credit agencies. If there are any inaccuracies you can dispute them with the credit agencies. At this point you should contact a mortgage broker in your state and show them your credit report. By doing this you are not having your credit pulled by a third party which could drop your score a few points. (What are points: They are a way of evaluating how much of a credit risk you are.) Your Mortgage broker could refer you to a credit counseling agency or may say lets proceed with getting you pre-approved.
You should be pre-approved for a loan before shopping for a home. It is a big mistake shopping without it unless you are paying cash. Lets say you are out shopping for a home and you think you can afford one at $250,000, you spend 8 weeks shopping have looked at 74 homes and find one you love. Then you write an offer it is accepted but you can’t get a loan. You have wasted your time along with the sellers, agents and your mother-in-laws. Only to find out you qualify for a $200,000 loan.
To get pre-approved you need to fill out an application and provide some documents to your mortgage broker which could include: home address for the past two years, social security number, landlords for the past two years, name and address of employers for the past two years, w-2 forms, tax returns past two years w/ schedules, two most recent paystubs, bank statement past 3 months, checking , savings and credit union account numbers an locations, IRA/401K information and your mother-in-laws maiden name. You might also be required to provide debt info such as car payments, student loans, divorce decree or separation agreement, divorced personal debts, payments automatically drafted from your accounts along with an explanation for any late payments, judgments, liens to name a few. While these might seem lengthy all of them might not apply to you based on your situation and the type of loan your mortgage broker is trying to get you approved for.
Why haven’t you said anything about applying at my bank? That is because I am a mortgage Broker and I am biased. A mortgage broker works to get you a loan with any number of lenders not just your bank, the mortgage broker works for YOU not the bank.
Yea but how do I chose a mortgage broker? This is very important step, Ask for referrals from friends, family and people in the real estate community. Then ask a lot of questions, interview a few of them. Don’t necessarily go with the person who looks at your credit report and says I can get you a 2.5% interest rate. They will not have enough info at that point to give an accurate quote. Go with the Broker who will work for your best interest. Ask them their qualifications, are they FHA approved, what lenders do they work with. A lot of blogs and newspaper articles on the internet tell you to ask how they get paid, It is simple in florida we are required to disclose it within 3 days of you application. This might be an important question but the bottom line is that you are paying for it in one way or another. You should not have to worry about this if spend your time finding an honest hardworking mortgage broker.
Next: Finding a Real Estate Agent
David Chamberlain Realtor/Mortgage Broker
