Buying a home can be exciting but complex, especially for first-time home buyers. Bank of America educates buyers on what to expect from the mortgage process.
Buying a home is an exciting experience, but it can also be challenging, especially for first-time buyers or buyers who haven’t been through the process in many years. However, by working closely with a mortgage professional and proactively learning what documents and steps are necessary, home buyers can better navigate the mortgage process.
First, potential homebuyers need to understand their complete financial picture, including all income and debts. Most lenders have online calculators and budget templates that can help. Once an accurate budget is completed, prospective borrowers should talk to a lender or mortgage professional to get prequalified.
Although getting prequalified or pre-approved for a mortgage is not necessary, it can help potential buyers focus their home search to properties within a price range they can comfortably afford, and signal to sellers that they’re dealing with a serious buyer. To get prequalified, many lenders ask for certain paperwork upfront, including proof of income like pay stubs, W-2 forms or tax returns, and debt information such as car loans, credit card and other debt statements. Borrowers should be aware they may be required to provide updated income and debt information again during loan processing to ensure the lender has the most current information prior to the loan closing.
Once potential buyers are pre-qualified, they can begin the search for a property that fits their needs and budget. Working with an experienced real estate professional can make this process easier. When an offer is made, and the seller accepts, the buyer will be presented with sales documents that list the address of the property, sale price, and contingencies that must be met before the transaction closing date.
At this point in the home buying process, a mortgage loan officer will help the buyer submit the loan application and all the necessary documentation. During this time, buyers should:
- Stay in Touch with the Mortgage Loan Officer: It is important that potential borrowers work with the mortgage loan officer to fully understand the types of paperwork that needs to be submitted and that the process is understood. Missed deadlines and incorrect documentation can delay the closing date.
- Ensure all Paperwork is Submitted: Within three days of submitting the loan application, borrowers will be sent a Good Faith Estimate, which lists all of the estimated closing costs and other fees associated with a home purchase, as well as a Truth in Lending statement, which outlines the estimated rate and terms of the loan and any finance charges. Before the loan is processed, there will be a check of the home’s title, physical inspections and appraisal of value. In most cases, home buyers also need to have purchased homeowner’s insurance.
- Be Patient During Underwriting Process: After the paperwork is reviewed, an underwriter will decide if a loan is approved, as well as a finalization of terms. As part of the closing package, buyers will receive a HUD-1 Settlement Statement which lists the finalized closing costs and down payment amount needed for closing day.
- Prepare to Close the Loan: Buyers need to make sure to read and understand each purchase and loan closing document before it is signed. The paperwork will need to be signed in front of a notary public. The buyer will then submit all the signed paperwork, the down payment and closing costs to an escrow company. On closing day, the escrow company manages the distribution of funds to the seller and other parties.
“Homebuyers should ask a lot of question and familiarize themselves with the mortgage process,” said Matt Vernon, retail sales executive at Bank of America Home Loans. “In addition to working with an experienced mortgage loan officer, we offer other valuable resources, like our interactive Home Loan Guide and Clarity Commitment®, to prepare homebuyers and help them clearly understand the loan process and their particular loan terms.”
The mortgage loan process can be complicated, but working with the right lender and real estate professional can help create successful homeownership. More information about the steps to becoming a homeowner can be found on Bank of America’s home loan guide at http://myhome.bankofamerica.com.
Tagged with: Bank of America • Bank of America Home Loans • Business • Closing costs • FHA • First-time buyer • Good Faith Estimate • Home Sales • Loan • Mortgage Broker • Mortgage loan • Mortgage rates • Real estate • United States
Filed under: Real Estate