First Time Home Buyer Guide – Home Buying Process:
Gather Your Documentation.
Mortgage lenders typically require a set of certain core documents and information. Your Poli Loan Officer will help you determine exactly which documents to provide, but it will help if you can have the following documents in hand ahead to expedite the process:
- W2 forms for each applicant for the past two years and/or two years of federal tax returns (all pages and schedules) if an applicant is self-employed
- 30 days of the most recent and consecutive pay stubs, which include year-to-date earnings
- The last two months of checking and savings account statements
- A fully executed (signed by all parties) copy of your Purchase & Sales Agreement (when available)
Obtain a Pre-Approval Letter.
Requesting a pre-approval letter from Poli Mortgage Group is an important step in your new home purchase process. Generally, a pre-approval letter can be issued within a couple of days after you’ve submitted all required documentation. The letter will indicate the loan amount you are eligible for, and will also qualify you as a serious buyer in the minds of your realtor and potential sellers, which gives you greater purchasing power.
Shop for Your First Home.
Your pre-approval establishes the preliminary mortgage value you qualify for, so now you can prepare a property wish list before enlisting the help of a realtor. Start with a price range you would like to see homes in and also include your geographical area(s) of interest. Additionally, make sure you note the home features you would like in your new home, such as the number of bedrooms, a fireplace, a pool, etc. You will also want to identify up-front what features you deem “must haves” and which items you may be willing to compromise on.
As you consider the price range you want to shop in, remember to include other home-related expenses in your budgeting. Often, new home owners will want to make minor updates, add personal touches and furnish their new home immediately upon closing their loan. Be sure to consider what level of reserve you may need for these types of post-ownership investments.
Make sure to bring a camera as you visit homes and take notes. Educating yourself about the housing market and home values prior to meeting with your real estate agent will also arm you with insight on what inventory is available within your price range. The more information and knowledge you have ahead, the more time and potential money you will save as you follow the steps to locate your new home.
You will want to find and work with a good realtor. Someone you feel comfortable with, whom you feel has your best interest in mind. Attend open houses, search the internet, and visit specific homes with your realtor. For your convenience, Poli has assembled a list of reputable realtors in your area.
As soon as you find a home you are interested in, your agent can help you evaluate similar homes in the area. You’ll want to know what these comparable homes have been selling for or are currently valued at. It’s also important to know how long these homes were or have been on the market, along with any pro’s and/or con’s your realtor knows about all of the comparable homes. Never forget, you are your realtor’s customer, and they should be willing to provide you with all the information you need to see prior to making any commitment.
Make an Offer.
Once you have successfully completed the above steps, and you have found a home, now is the time to make an offer to purchase. Your realtor should make you aware of the seller’s needs (i.e. a need to close quickly), so you can consider them in your price negotiations.
Review and Sign a Purchase and Sales Agreement.
The real estate Purchase and Sales Agreement is a contract between the seller and the buyer. Key information contained in this agreement identifies the parties involved, the property and the purchase price.
In addition, the Purchase & Sales Agreement includes two critical pieces of timing information. The first date identifies the time of the commitment, sometimes called the contingency date. This is the date the buyer must have approval from their lender. The second critical timing item is the closing date.
Both of these dates are determined by the buyer and seller of the home, along with the real estate agents, and/or representing attorneys. The Purchase and Sales Agreement represents a meeting of the minds, but it is also a legally binding contract which should be reviewed by your attorney.
Order a Home Inspection.
It is extremely important to have the home you are interested in inspected by a professional. Your Purchase and Sales Agreement will generally have a contingency clause stating the offer to purchase is only valid with a home inspection. The hired home inspector will evaluate all critical elements, such as the condition of the home and how safe it is. The inspection review and report cover all structural and mechanical facets of the home to determine if it is constructed well. With a contingency in place, if there are any egregious problems, you are able to cancel the agreement or renegotiate.
Complete the Mortgage Process.
Since you’ve already submitted most of your key documentation for your Poli Mortgage pre-approval, your mortgage loan application has already begun working its way through our system. Now that you have decided to make an offer on a home and it has been accepted by the seller, it is time to work with your Poli Loan Officer to finalize the completion of your mortgage transaction. At this time, your Poli Mortgage Loan Officer will need you to submit your Purchase and Sales Agreement, and any other additional documentation they specify as needed.
Most likely, during your initial conversation(s) with your Poli Loan Officer, you discussed the loan program which will best fit your financial/mortgage requirements. This is the time to confirm the loan program you’ve decided upon and also discuss the current interest rate with your loan officer, so you are ready to lock your loan rate in when the time is right.
Close Your Loan.
Your Poli Loan Officer will let you know ahead when everything will be ready to close on your home. We believe you should have representation of an attorney at your closing, and you can bring your own attorney, or we can secure a reputable attorney to attend on your behalf.
Prior to your closing, you will receive a settlement document (known as HUD1) which details all the closing costs, credits and how much money you will need to bring with you to the closing appointment. You should review this document prior to your formal closing, so you are prepared. Typical closing costs include the appraisal, title insurance, documentation fees, loan origination fees, recording fees, survey fees, and others. Additionally, there are pre-paid items (also known as escrows) which must be paid at the closing. Escrows could include pre-paid interest, homeowners insurance, taxes, and mortgage insurance (as applicable). Your Poli Mortgage Loan Officer will be happy to educate you on any of these fees you’d like to know more about.
CONGRATULATIONS! YOU ARE NOW A FIRST TIME HOME OWNER!!!