1. Get Pre-Approved First
During the pre-approval process all the information necessary to complete a mortgage transaction will be collected. A pre-approval is substantially different from a pre-qualification. A pre-approval is the process of actually getting approved for a mortgage without having an actual property picked out yet.
Having a pre-approval helps substantially and will also help in negotiating with a seller. After all, a pre-approval tells the seller that your offer is already approved and informs them that you are ready to move forward with the purchase.
2. Making Verbal Agreements
There is simply no such thing as a verbal agreement in Real Estate. If there is something that you would like the seller to agree to, make sure they agree in writing. If there is a verbal agreement made, there is no feasible way to prove that that agreement was made. On the sales contract make sure everything that you are requesting is either agreed to or denied.
3. Find Your New Home
Now, with your pre-approval letter in hand it is time to search for your new home-to-be. Look at several properties, even if the first one you see seems as though it may be, "The one." Once you have chosen your new home write a sales contract and give a deposit. Then forward the sales contract to your broker to accompany the rest of the documentation you have provided. Due to the fact that you already have a pre-approval the loan process should be relatively quick.
4. Lock in Your Rate
It is important to notify the mortgage company that you would like to lock in your rate. Once a rate is locked you have a certain amount of time to close. You can lock a rate for 15 days, 30 days, 60 days, and in some cases 90 days. Once you have locked the rate, you are guaranteed that the rate will not fluctuate.
You also have the option to float the rate. If you float the rate and the rate goes down you could then lock at a lower rate. If the rate goes up you would be subject to a higher payment. It is always suggested that you lock the rate due to the volatility of interest rates. You may ultimately have to pay a higher payment if you decide not to lock your rate and rates increase.
5. Get a Professional Home Inspection
It is always wise to have a home inspection done. A home inspection is done by an independent home inspector. A home inspection involves the home inspector going through the home prior to purchase. In some cases a house that looks beautiful from the outside may have some underlying issues that may be unseen. It is important to know ahead of time if there are any issues with the property.
A home inspector will make sure all of the outlets work, that there is no water damage, and that all of the appliances work. They will assess all of the homes mechanical systems and make sure everything is in working order. They will also let the home buyer know of any current issues or any items that could become issues.
6. Close on Your New Home
Get a copy of all of the loan documents prior to closing. It is important to be able to read through all of the documents as time may be limited during the closing. Always call your broker ahead of time with any questions. Never close on a property without having ample time to review the closing documents.
After reviewing all of the documents set up a closing with the seller and your attorney. At the closing table make sure you have all the required checks and documentation. You should receive a checklist prior to closing. Remember, never sign anything you do not understand, and ask plenty of questions to make sure you understand.
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