When it’s time to buy a home, if you know what to expect the process can move more smoothly. Here’s a timeline of what you need to know, and when it will happen.
The mortgage process timeline can be broken up into four parts:
During step one, you’ll need to figure out what type of mortgage you’re looking for, be it fixed rate or variable APR. Once that’s done you’ll get a credit check and be able to figure out how much of a monthly payment you can afford. You want to spend 28% or less of your monthly income on a mortgage so you’ll be doing some math here. This should take about a week to give yourself enough time to really break it all down carefully. After you figure out what you can afford you’ll want to get a pre-approval letter. You can expect that to take around another week. You’ll want this letter with you when you go house hunting so that they know your offers are serious. Remember, depending on your financial situation, a lender may allow you to borrow more than that 28%, but be extremely careful taking on a debt you may later have trouble paying back.
In step two, you’ll look for a home and make an offer. This time frame is extremely flexible as it largely depends on how quickly you find the home you’re looking for. Tell your agent your budget up front so they don’t show you a ton of homes you can’t afford. Don’t make the mistake of falling in love with “too much house”.After you find the right fit, the agent will help you come up with an offer and submit it to the seller’s agent. The terms of the offer will include things such asprice, possible closing time frame, and any conditions that might cancel the contract (such as the inability to secure a loan or receiving an unsatisfactory inspection).
In step three you’ll turn that pre-approval letter into an actual loan. You should get quotes from several lenders including community banks, large banks, online lenders, and credit unions so that you’re sure you’ve gotten the absolute best rate. Make sure you’re asking for the same thing from each lender so that you’re comparing apples to apples. You’ll get an inspection and appraisal on the home as well.
Finally, in step four your lender will verify your income and assets, as well as debt and home value details. You may be asked for more information during this step so be prepared to provide everything promptly, or else you can hold up the final approval.
After you’re cleared by the bank to go to closing, your lender will provide you with a closing disclosure. You’ll have at least three days to review your disclosure and make sure that everything is correct.
After that is done you’ll need to choose a closing agent to assemble the legal documents you need for your loan. They will also handle the money for the purchase. You’ll typically want to bring a valid ID and your “Cash to Close” payment in the form of a cashier’s check to closing; but you’ll want to ask your closing agent exactly what to bring, and how much. The closing is when you’ll sign the final sale contract and receive the keys to your new home.
Once that’s done it’s time to sit back and settle into your new home, and start making those mortgage payments!