There are several factors that determine the loan amount and purchase price that you can afford. For qualification purposes, lenders look at income, debt, assets (how much money you have for the down payment, closing fees, points, and other funds necessary to close your loan), as well as credit. There are many different loan programs that offer different terms and rates, and some require lower down payments than others and offer more flexibility in credit and income. The best thing to do is get pre-qualified so that you know what loan programs you qualify for, the price range you can afford, and what your monthly payments will be. We will provide a pre-qualification at no cost. You can also use our industry leading calculators to find out what your payments would be and determine what purchase price and loan amount is comfortable for you.
Traditional conventional financing requires a down payment of 10 to 20% of the purchase price of the home; however, there are other programs available such as our FHA program that allows you to buy a home with as little as 3.5% down. In addition to the down payment, you should be aware that there are other fees associated with purchasing a home. For example, there are closing fees, pre-paid interest, and prorated items such as property taxes and homeowner's insurance. Call and speak with one of our licensed Loan Officers to get a better idea of what you can expect.
A pre-qualification is an informal, cursory review of income, assets, and credit (usually conducted over the phone), which will give a potential buyer a good idea of affordability. Once the necessary information is gathered, the lender issues an estimate of loan amount and purchase price for which the buyer qualifies. A pre-approval is a more formal, intense process in which income, assets, and credit are documented and verified; and the lender issues a conditional approval based on a more comprehensive look a potential buyer's financial situation. Talk to one of our licensed Loan Officers for more information regarding pre-qualification.
Although a home inspection is not required, it is a good idea to obtain the services of a professional qualified inspector to help you determine the condition of the home you are looking to purchase. A professional inspector will look for any structural issues as well as mechanical problems that may exist in the home that could cause problems in the future. In addition to a structural review, an inspector will also check faucets, toilets, appliances, and other items in the home to make sure everything is in working order. If something needs to be addressed, you can address them with the seller prior to closing.
Standard documentation collected for a purchase transaction includes information regarding your income such as paystubs covering the most recent 30 days and W-2s for the last two years, asset information such as bank or mutual fund stock statements covering the last 60 days showing source of funds for your down payment, closing fees, points, pre-paid items, and other funds needed to close your loan.
A typical period is 30 to 60 days. The time period, defined on the purchase contract and agreed upon by both buyer and seller, is usually what dictates when your loan closes.
Typically, you will sign your loan documents at a designated settlement office such as an title company office or attorney's office. In the presence of the signing authority, you will review and sign all your loan documents and then present a certified or cashier's check to pay the remaining down payment, closing fees and other applicable closing funds. You may also wire your funds directly to the title company. Your loan processor will guide you through the process and will advise you on what needs to be done when. Once the loan documents are signed, you are the proud owner of your new home. Don't forget to change the locks!