Steps to Buying a Home

Buying your first home is a big investment and can be confusing at times. We’re here to make the process less intimidating and more understandable. Whether you’re a first-time homebuyer, buying a luxury home, or investing in properties to build your real estate portfolio, we can help guide you through the process toward getting that new set of keys!

Contact a member of The Mortgage Hub

Congratulations! You’ve decided to buy a home. Before beginning the loan process, it’s important to do your research. There are many steps involved to make sure you have a smooth and successful experience. Start by getting pre-qualified. Simply call or click “GET APPROVED NOW” to fill out the pre-qualification form online and a licensed loan officer will contact you within less than 24 hours.

Pre-Qualify

What is pre-qualification?
Pre-qualification determines your ability to repay a loan based on information you provide. Your liability, asset and income information are reviewed by a licensed mortgage loan originator to establish the maximum purchase price you can afford and how much you may be able to borrow.

What are the benefits of pre-qualifying today? 
Pre-qualification may establish you as a serious buyer when looking at real estate, give you an advantage over other buyers looking at the same property, and let you know what you can afford before home shopping.

Understand Your Credit Report

Your credit score is not the only factor in getting approved for a mortgage, but it is an important part of determining what you will be able to qualify for. We can help walk you through obtaining your credit report and understanding your credit report and how it works. It’s important to make sure that your score is accurate when applying for a loan. You can get a free credit report once a year online by visiting annualcreditreport.com. 

Verify report for accurate information. Report & dispute inaccuracies with the credit bureau. TeamUFG has helped numerous clients over the years to clean up issues with their credit and get them into a position to refinance or purchase a home. Disputes in process may delay loan approval. 

Set up payment plans:
​Paying down high credit balances may positively affect your credit score. Let us explain how that works.
By paying down applicable lines of credit before applying for a loan, you may qualify and get approval for getting approved for a better interest rate. 

Call your creditors and work out a budget-friendly payment plan on delinquent accounts prior to applying for a loan. Work out a plan that won’t harshly affect your debt-to-income ratio but will still let lenders know you are serious about being credible for your debts.

Estimate Your Expenses

Use our online calculators to get a general idea of how much home you can afford. Determine how much home you can afford, what your estimated monthly mortgage payment may be, how much your down payment should be, and more. When budgeting to plan for a mortgage, a loan originator will help you include:

• Monthly bills
• Estimated property taxes
• Estimated homeowners insurance estimated private mortgage insurance (PMI) living costs
• Potential Homeowners Association fees.

Get Pre-Approved

Pre-Qualification
Determines your ability to repay a loan based on information you provide. Your liability, asset and income information are reviewed by a licensed mortgage loan originator to establish the maximum purchase price you can afford and how much you may be able to borrow.

Pre-Approval
A pre-approval is a written commitment from a lender to extend a mortgage to you for a specific amount and time period. 
It is important to understand the difference between pre-qualification and pre-approval. A Pre- qualification determines your ability to repay a loan based on information you provide. A Pre-approval is when your information is reviewed and verified by an underwriter. This involves an analysis of your financial status and credit history. With a pre-approval, you’ll be able to negotiate your home purchase confidently. Realtors and sellers will often take your offer more seriously if you get pre-approved prior to house shopping because it lets them know you are ready to make a deal. A pre-approval may help streamline your process and result in a smoother transaction.

Find The Right Realtor

Now that you have initiated the pre-approval process, and have an idea of how much you are comfortable spending, a realtor can help you through the home buying process. Finding the right realtor is just as important as finding the right lender. Make sure that you work with a real estate agent you can trust, has a proven track record, and has your best interests at heart. It’s useful to get referrals from family and friends who’ve been through the home buying process. We can help you in finding that right realtor that fits YOU. We have partnered with the highest quality and most knowledgeable realtors in the local market.

Start House Hunting

You have a lender and you have a realtor. Your next step will be to start looking at houses. It is easy to get carried away with the excitement of becoming a homeowner at this point. You may only be thinking about yard space, decorations and the amount of bedrooms you want, but it is important to consider all aspects of the property before moving forward. 

Location is key! 
Consider the crime rate, public school ratings, your daily commute, traffic patterns, and local amenities when choosing a home. If public parks, libraries, pools, sporting arenas, churches, restaurants or shopping centers are important to you, make sure you consider their proximity to your neighborhood before getting lost in visions of porch swings and curtains. 

Be aware of the condition the home is in. 
You may think you have found your dream home, but keep in mind any extra stress or costs that may come up when you’re learning about that crack in the wall or the furnace system from decades ago. If you’re going for a fixer-upper, make sure you have factored in time to your moving process, in addition to additional expenses. (Also note that an FHA203(k) will allow a buyer to finance qualified repairs). ​

Make Your Offer

You may want to keep several factors in mind as you and your real estate agent get ready to present an offer to the seller. 

• The asking price of the home
• Recent home sales in the area
• Market conditions
• Prospective re-sale value
• Satisfaction with the neighborhood and amenities Condition of the home 
• How many other prospective buyers are looking at this home 
• If you have a back-up home in mind 

After the offer is accepted
Before closing, clarify when the seller will be vacating the home. If they remain on the property after the closing date, you are entitled to negotiate rent payments.

Start The Loan Process

By now, you’ve obtained your lender, you’ve gotten pre-approved, and you’ve found your dream home. It is time to start the loan process! Meet with your The Mortgage Hub team member to help you gather paperwork and submit your mortgage application. 

Gather all necessary identification and paperwork
First we’ll need to confirm your identity & Income Information. For this, we’ll need; 

• Your full legal name, Social Security number, and date of birth.
• A copy of your Social Security card may be required. 
• Your phone number, email address, and residential mailing addresses for the past two years.
• Your primary and secondary income and sources. 
• Your government-issued photo ID.
• All employer names, addresses, and phone numbers for the past two years. 
• The values of your bank, investment, and retirement accounts, as well as any other asset accounts. 
• Your monthly debt obligations. 
• The address of the property being purchased, year built, estimated down payment amount, and the purchase price. 
• Estimates of annual property taxes, homeowners insurance, and homeowner association dues (if any). 

If you are self-employed, there are a few other pieces of information you will be asked to provide: 

• Your personal and business federal tax returns for the past three years. A year-to-date profit and loss statement.
• A complete list of all business debts.

Next, we will ask you about your Credit Information, including: 

• A letter of explanation for any late payments, judgments, collections, or other derogatory credit history items. 
• Source of funds documentation for any large deposits on asset or bank statements. 
• The judicial decree or court order of each obligation due to legal action. 
• Bankruptcy/discharge papers for all bankruptcies in your credit history. 
• Payment histories for utilities, cable TV, internet, phone, auto insurance, and any other expenses. 
• Income & Tax Documentation
• IRS Form 4506-T — request for tax transcript; must be completed, signed, and dated. Your W-2s for the past two years.
• Pay stubs for the past 30 days. 
• Your federal tax returns (1040s) for the past two years. 
• Your most recent two months’ asset and bank statements for all accounts on your application (all pages, including blank pages). 
• A written explanation if you have been employed less than two years or if employment gaps exist. 

Finally, we will need a purchase contract signed by all parties and Homeowners insurance information, including the agent’s name and phone number. These documents may not be all-inclusive, but by having these on hand, you will expedite the application. 

Submit your application
Fill out and sign Form 1003 — the residential loan application — including the attached fair lending notice, loan info sheet, and credit authorization. Note: Do not use whiteout on this paperwork. Mistakes should be crossed out and initialed. 

Review your Loan Estimate
This document contains important details about your loan, including estimations of your interest rate, monthly payment, closing costs, taxes, insurance and any prepayment penalties. The lender must provide this to you within three business days of receiving your application. 

Review your Fee Worksheet
This form is single handedly the best document that breaks down your transaction in regards to all the moving parts.
Clear any additional requests from underwriting. Underwriting is the department that reviews all of your identification, paperwork, and credit history to assess if you will qualify for the desired loan. They determine the terms of the loan and will occasionally require extra documents to fully understand your background and make their decision. It is important to be available during the underwriting process and to respond to any requests promptly and thoroughly. 

Review your Closing Disclosure
The lender must provide this to you at least three business days before you close your loan. This document contains the final terms of your loan. Use this timeframe to review it thoroughly and compare it to your loan estimate. Don’t be afraid to ask your lender questions if you are unclear about the terms.

Get A Home Inspection

Home Inspections are important to help you fully understand the condition of a home. They can also be helpful for negotiations to help drive prices down or have additional services stipulated in the contract.

Take the time to get commitments in writing.During the sales process, a seller may make a variety of verbal guarantees. For example, the seller may promise to fix the roof before move-in or provide all of the kitchen appliances. Make sure this information is included in writing in any agreements you sign. If an agreement is not explicitly written in a contract, the seller is not obligated to abide by it. This also includes all of the details of your loan. Make sure the amount, payments, rate lock, and other details are clearly stated in writing in a signed document.

Set Closing Date, Time & Location

Bring along any co-applicants and your realtor, if you would feel more comfortable having them present. Closing usually takes place in the presence of a notary public. You should be prepared for several things:

• Review the final documents. Make sure the rates and amounts are what you have agreed to.
• Bring a cashier’s check to cover the closing costs and down payment. Personal checks are not accepted. If in Indiana anything over $10,000 has to be wired to the title company.
• Sign the loan and be prepared to show photo ID and possibly a Social Security card. If you currently have an apartment, condo or house lease.

Consider scheduling your closing date around the time that your lease will be up. Some home buyers prefer to not have a payment overlap, while others enjoy the overlap if they have projects that need to be completed in the new home.

Receive Your New Set Of Keys

Congratulations, you are now a homeowner! Although you may now have the key to your future, don’t forget about the key to your mortgage. The Mortgage Hub is here to offer you guidance on any future questions or situations that may arise. A licensed loan officer will always be available to help you refinance, use your home equity, or even purchase additional properties to build your investment portfolio. ​