Homeownership is the “Great American Dream”….it also happens to be one of life’s greatest stresses. However, if we pay attention to these simple 9 steps, we can maximize the “Dream” part while minimizing the “Stress” part of the process. Over the next series of articles, we will cover the necessary steps to buying a home.
This is part three of a part three series on home ownership.
7. Processing your mortgage
Now that the building inspections are finished, and terms are agreed to, your mortgage company will(continue) to process your mortgage. What that means to you the application package you signed, your credit, income and asset verification documentation, and appraisal will be underwritten and a credit granting decision will be made, or really affirmed, provided the pre-approval was issued correctly.
Another point to pay close attention to is locking your rate. While you signed an application with a particular rate, the rate is often not guaranteed until the lender “Locks your Rate”. In other words, guaranteeing your rate for a set period of time.
If you are numbers person, the best indication of the directions of mortgage rates is paying close attention to the yield on the 10 year bond from your application to the time you lock, which will benchmark which direction rates should go. You can follow the 10 year at http://finance.yahoo.com/q?s=^TNX
Once your mortgage application is approved, you will receive an approval letter or mortgage commitment letter, which confirms your approval terms of your new home loan.
8. Closing on your home, and mortgage
This normally takes place at a title company. This is the day of settlement, in other words, you will bring your down payment, closing costs and prepaids in the form of a cashiers check payable to the title company. You will be signing all of the mortgage closing papers, and title company papers to consummate the purchase of your new home. Make sure to review your mortgage related document that the costs and rate are what was agreed to.
The title company acts as the financial hub to insure funds are disbursed to the correct party, and insure both the transaction and that you will have clear title to the home you are buying.
9. Take Possession of your new home
Usually this is when you get your keys. You have your new home!
Important Note: If at all possible, do everything in your power to avoid moving the same day you close. Remember, this is one of the biggest, and most complicated transactions of your life. If the slightest thing goes wrong, your whole life is on a truck, which creates an enormous stress. For example, if the home you are buying is not finished, or ready, there is an error on any of your documents, you can just go back home and wait, even negotiate more concessions. However, if your life is on a truck, the stress can cloud your judgement at a time you need your head to be clear.