Last week, we started detailing the loan process. This week, we will get into more detail about what happens after you are approved. We will also discuss some common misconceptions of the home-buying process. We hope to educate future buyers on the process and ensure that the process is as easy and pain-free as possible.
Once the underwriter gives you approval, then it is time to go to your realtor and say, here’s my price range, this is what I can look at. The great thing about being approved is that it strengthens the offers that you put on houses. The lender should give you a letter that says you are not only pre-approved but already approved by underwriting. Therefore, if there are competing offers, you are going to look the strongest especially against someone who may be only pre-qualified.
If you find your perfect, dream home, you put an offer in, the listing agent will likely call the lender to discuss your file. We typically will tell the listing agent how great you are, and how you are already approved for the loan. Once your offer is accepted, then the loan becomes subject to the property itself.
You must have an appraisal on the property to ensure the property is truly worth what you are paying for. You must have an appraisal because the lender has to know that the money they are lending on a property is worth what it is said to be. It is also recommended that you get an inspection of the property to make sure you, as the buyer, know what you are getting into. This is when you can reach an agreement with the seller to fix anything that needs to be fixed, or if you don’t want anything fixed, that is fine as well. Appraisals are a lender requirement whereas inspections are for the buyer. Once the appraisal is ordered, the appraiser will send their report back to the lender.
If the appraisal value comes in lower than the purchase price, then it depends on what your individual contract says. Typically it is up to the buyer to decide if they are willing to pay more than what they appraised value came out to.
Once the appraisal and inspection are complete, we may need updated documents like pay stubs or bank statements. Sometimes finding a home can take a while, so we have to get the most up to date records. From there, we will find the rate and the program that works best for you. We lock the rate in and ultimately wait for the underwriters to come back and say you are “Clear to Close” or CTC. Then, it is time to celebrate.
The next step after you are clear to close is to ensure that there are no hidden liens on the property or anything like that. The title company makes sure the title and property your purchasing is clear. After the title company proves the title is clear, then it is time to close.
We’ve outlined the entire loan process from start to finish in these blogs. However, the process can be very daunting to some people, especially if they are first-time home buyers. We strive to educate our buyers and make the loan possible as easy and pain-free as possible.
A lot of people, mainly the younger generation, often believe that they have to have 20% down in order to purchase a home. And that certainly is not the case anymore. There are several loan options available for buyers, some require as low as 3% down. It all depends on the type of loan you choose.
The best thing for you to do is to talk to a loan officer and even fill out an application. A loan officer can let you know all your options or maybe what you need to work towards. It is completely free to talk to a loan officer and figure out your options. Don’t wait just because you don’t think you can afford it or that you don’t have enough money to put down. We would love to have the chance to work with you and answer any questions you may have.
Shanna Landin has been in the banking and financial industries for 30 years. Before receiving her Certified Public Accountant credentials, Shanna graduated with honors with a Bachelor of Science Degree in Accounting. From becoming a Controller of a multi-million dollar business at age 27 to running her own consulting company for 13 years, she has gained vast experience, which she now uses to serve her clients as a mortgage banker. Shanna currently resides in Englewood, CO with her husband and their children aging from 17 to 25 years.