Thinking about buying a home? What an exciting time for you. Buying a home is a dream for many and if you are in a position to buy, let’s make that dream a reality. A dream home looks different depending on the situation you are in. Is this your “first home?” Is this your “time to buy a bigger home?” Or is this your “are we ready to downsize home?” Either way, let’s make sure you are prepared and ready for this purchase. Let’s make this a pleasurable experience with no surprises or unexpected costs along the way.
Just like in life, things are constantly changing and evolving in the mortgage industry. It is wise to stay on top of these changes so you can make the best decision for yourself and your family.
When buying a home there are a few bases you need to consider. Learning those bases of obtaining the right loan and financing can make the difference of thousands in dollars and tons of stress along the way.
There are Four Basic Stages of Obtaining a Home Mortgage
The First Stage is Research. You have an idea and a dream in your mind
of your next home. Now it is important to balance that dream so you can
make it a reality. To start off, you need to determine what loan amount is
affordable for you. Let’s be real in this assessment. Look at all your
responsibilities and current obligations while also looking at your possible
future responsibilities.
- Review your income and expenses.
- Be sure you clearly understand the cost of owning a home. Such as
maintenance, repairs, insurance, and taxes. - Remember it is not always the amount you qualify for, it is how much
you can comfortably afford.
The next step in the research is finding the right lender. A lender with your
best interest in mind. One that will make sure you have access to the best
rates and terms available. Historically, local credit unions are best in both of
these areas. Our mission is to make sure you stay focused and excited
about buying your new home. Our goal is to give you all the tools and
information available and needed so you can make the best decision – with
little to no unexpected surprises or expenses.
The Second Stage is the Application. After you have done your research
and found the perfect lender for you, it is time to start the application
process. The application stage can be simple and yet a little overwhelming
because of the questions and details asked of you. No need to worry, we
will walk you through the process and make sure you understand each
question.
A few basic things needed in the application stage are:
- Estimated Income
- Provide Government Issued Identification
- Address of home
- The estimated value of the home
- The loan amount you are requesting
- Permission to run an initial credit report
With the above information, you will be accepted or denied and then given
the reasons for the decision. It is important to know your legal rights and
responsibilities. It is also important to know credit unions have to abide by
the Equal Credit Opportunity Act and Fair Housing Act. That is why it is vital
to have someone walk you through the process who can explain your rights
if denied or accepted. There are next steps in either situation.
If accepted, at this stage you will know how much you qualify to borrow and
the current interest rate you will be given. You will be provided with
estimated loan terms, total payments, and fees associated with your loan.
These are just estimates designed to help you decide and also give you the
acceptance letter needed to go ahead and start making offers on your
dream home. Make sure you read through all the information and
understand what you are given. Again, we are here to walk you through the
process – so ask us if you have any questions.
The Third Stage is Underwriting. The amount of requests during this
stage can be somewhat trying but it is necessary to make sure all due
diligence is completed properly and done on all sides of the purchase.
There are different steps that need to occur and additional documents that
will be needed. Just be ready and understand this is for your and the
lender’s protection. Be sure you ask questions if you do not completely
understand.
Additional Information needed this during stage:
- Obtain an appraisal of the property to determine the current value.
- Obtain an Inspection of the property to make sure it is up to code and
you are aware of any needed repairs. - Provide more financial and verification documents. Such as:
- Bank statements
- Job verification
- Payment history
- Explanations of things on the credit report
We know this phase can seem a little personal and it is understandable to
have questions, but just know the best way to be prepared is to know what
is expected, be honest and forthcoming, and know we are all on the same
team wanting you to close on your new home.
Keep in mind that during this phase, it is important you want to maintain
your current financial position and be very careful not to make decisions
that could impact your finances or your credit report.
The Fourth Stage is the Buying Stage. Once you have made it through
the underwriting stage and your loan application has been approved you
have reached the final stage! You are almost to the finish line!
During this stage, there are still a few more things to make sure your home
is ready for you and there are no unexpected surprises. Be prepared during
this phase to have several important disclosure forms, inspections, and a
more detailed list of expenses you are expected to pay.
You will be given a closing agreement that should break down everything
that is expected of you and the seller. Make sure you understand the
breakdown and what you are required to pay. This can be discussed in
more detail because many things are negotiable between the buyer and
seller.
Three topics to become more familiar with because they will be discussed
during this phase are:
- Promissory Note – What are you agreeing to describe in your loan.
- Escrow Statement – Estimated taxes, insurance premiums and other
possible charges. - Mortgage or Security Instructions – Explaining your rights and
responsibilities as a borrower and the lender’s rights to foreclose on
your home.
At AOD Federal Credit Union, we understand the excitement of buying a
home and our goal is to keep you excited along with being prepared and
informed. Mortgages change every day. It is our job to stay on top of those
changes. You do not have to go through the process alone. We are here to
make sure you are comfortable and have all the information needed to
purchase your dream home. Please visit our Mortgage Center or contact us
if you have any questions!
AOD Federal Credit Union is an Equal Housing Lender. NMLS#41549.
For more information, visit MyCreditUnion.gov
