Buying a house can be stressful - especially in today’s market.
From finding the perfect home to nailing down the right interest rate, making sure you follow all the steps necessary can be overwhelming!
However, knowledge is power in the real estate world. When you know what to expect from each of the parties involved and the timing of each step, the process will become much clearer and you won’t have unnecessary drama involved.
One part of the real estate process that is often shrouded in mystery is mortgage financing. Let’s break down the common steps involved with the mortgage side of your home buying process to give you a clearer picture of what to expect:
Step 1: Getting Your Financial Approval Package Ready
As I’ve noted in a previous article, it’s critical to start early when it comes to getting your financial package together and having a loan approval/commitment in place. With your financial package ready and in-hand, you’ll have peace of mind that the financing is done when you make an offer. Of course, this will be pending based on the inspections and any items related specifically to the property itself.
Step 2: Escrow Opened & Appraisal Inspection
Your offer has been accepted - congrats!
The next steps that will take place happen almost immediately:
Escrow is opened with a title company (by the realtors involved)
The appraisal inspection is ordered (by the mortgage company)
When it comes to the escrow/title company, here is something to keep in mind: if you’re putting the new property in a Trust, assuming the seller’s solar lease, getting insurance coverage within a farm insurance policy, etc, you’ll want to be ahead of the curve in providing the necessary information to your escrow officer.
The title company has their own documentation requirements as part of the transaction. As you might imagine, each party involved will have their own process in working on your behalf.
Start early to avoid any hiccups along the way!
After escrow is the appraisal inspection. As you might imagine, the current real estate environment is competitive with low interest rates and a high number of families moving or refinancing their home. This has put a squeeze on the number of appraisers available.
It will take time to schedule the inspection, and more for the appraiser to complete their report. Once finished, they will submit the inspection back for review. If the property has special aspects, acreage, or is in a remote location, this can add additional time.
Once the report is completed, the mortgage company will need to review the report. There may be questions for the appraiser to answer based on the report’s findings itself.
Starting this process right when the contract is executed will allow time for this to be completed.
Step 3: Final Review & Closing Disclosure
Here is where being prepared early can pay off.
As the mortgage approval was done ahead of time, once the title information is available and the appraisal has been reviewed, it is time to put insurance in place. Only then will the mortgage company do their final review of all the documentation.
There may be a few outstanding questions, but you’ll be at the finish line & ready to review the Closing Disclosure.
The Closing Disclosure is a document which is prepared by the mortgage and title company. This disclosure outlines the terms of your new mortgage loan, including:
estimated monthly payment
Any other important details
You will read over this Closing Disclosure carefully, and then acknowledge its accuracy.
Once you’ve acknowledged the Closing Disclosure, you’re required to wait for three days for the final approval. Once complete, you’ll be able to sign your loan documents.
Step 4: Wiring Funds
Paperwork done, it’s almost time to finalize the process!
At this final step, you’ll be providing your closing funds to the title company (wire transfer or cashier’s check). The mortgage company will then review your executed loan documents in order to fund the mortgage and close escrow.
Wire transfer requests can be made (in most cases) until 1pm (PST). If the funds are requested past that time, the funding will automatically go to the next day.
Start Early To Stay Ahead
As you can see, the mortgage process is filled with critical steps that require a careful eye.
With the number of people and steps involved in the buying process, it is essential that the process remains transparent, your communication stays proactive, and you keep time on your side.
Start early, work with good people, and don’t hesitate to ask questions! If you’d like to learn more, contact me today to set up a consultation to discuss your unique mortgage needs in greater detail!