The Home Buying Process, Step by Step
28 Aug2007
Filed Under Selling · Tagged: Closing Documents, Financing, Lending, Listing, Pre-Approval · Print This Article
A 5 part series on what steps you need to take to make buying the perfect home easy
As you make the decision to buy your first or next home, the most important first step is to talk to your Realtor, so that I can get you set in a direction that makes the entire process simple for you and as easy as possible. You can read here what other people who were buying a home from me thought of my ability to make things easy for them.
From my perspective as an Accredited Buyers Representative, completely educated and experienced in representing Buyers in their home purchase, I feel that talking with a lender is the most important Step in the entire process. Your financing is the foundation of your home search, it defines what you can and will buy.
Our first of this 5 part series focuses on Financing for your home purchase.
It doesn’t matter if you have never purchased a home before, if you are buying your eighth home, or are preparing to buy a second home for yourself, you must understand where your financial boundaries are. This is a critical element to the entire rest of the process of purchasing a property.
You must talk to a reputable local lender to determine your debit to income ratio, your credit scores and your reserves. All of these and more factor into the loan that you qualify for. I can give you a few lenders names that I work with, who have proven over the years to be honest, reputable, creative and provide excellent service. Based on the type of property or loan you need, I will give you a few lenders.
As you may have heard from others, “A lender will always tell you that you qualify for a home 3 times more expensive than you would want to buy.” This is true with lenders who are not as focused as my select group of associates. I prefer to approach the loan approval dollar figure in a different way.
Loan Approval: pull credit and prove income confidentially with lender constitutes a loan approval, this is more official that a pre-qualification or pre approval
As a client of mine, I assume you have a monthly figure in mind that you are comfortable paying for your mortgage payment. This figure will include Principal, Interest, Taxes and Insurance for your loan, known as PITI. That dollar figure can then be shared with the lender, who will then work that monthly payment backwards to tell you what price range you need to stay within in order to keep your payment at or below that monthly dollar amount. From there, we can stay under a certain price range to keep you comfortable, or go above, as long as you make the decision that the higher price is worth the extra monthly cost to you.
This is one of the first items to discuss with the lender during your loan approval process. The lender asks a multitude of questions that can be answered in about a 20-30 minute conversation. It is important for you to understand that your conversation with these lenders is confidential. Your income, your debit all of that is not to be shared with me, your Realtor. The lender assesses your situation and only shares with me the types of loans you qualify for and how I can negotiate in the contract to get you the best financial terms possible. At no time am I privy to your credit scores, or income figures etc. This is important to me, that you are comfortable with me as your Realtor to sell you a home, I do not need to know that info, only what your price range is and the type of loan you are getting so I can help you capitalize on your negotiations.
See typical Pre Approval Questions here.
Once the lender has the info necessary, they can give you an idea of where your price range should fall. Once this has been determined, they can be prepared to write you a letter of
[...] reading The Home Buying Process Step 1, you know where your financial boundaries are, and you have a pre-approval letter, we are ready to [...]