Buying a home can be a very time-consuming task and one of the most important steps in the process is finding a mortgage company. To answer what may feel like an endless list of questions, we’ve put together a video series called #AskALender with help from our friends over at JFQ Lending, Inc. Each video covers a specific topic, from choosing a lender to qualifying for a loan. By breaking down the process into a few, simple steps, this video series can make the process of buying a home painless and easy!
Step 1: Choosing A Lender
In step 1, you will want to choose a lender that suits your individual wants/needs. From a pricing standpoint, the two biggest factors that determine the cost of a mortgage will be your credit score and how much you are willing to put down on a home. Both of these determine what you will qualify for, what the rate will be, and what the cost of your mortgage will be.
Outside of pricing, the biggest things a buyer could look for in a lender involve communication and experience. Poor communication can be a common theme amongst lenders, so choosing a company that responds promptly to phone calls and emails can be a crucial factor in your home buying process. It is recommended that you meet with multiple lenders to get a few quotes and learn about each business.
Step 2: Before You Buy A House?
Once you’ve chosen a lender, there’s more to learn about the real estate buying process. First you will want to get pre-approved by the lender you chose. Second, you will need to determine your down payment amount. Finally, make sure the mortgage payment you are looking for is something you can afford and fits into your budget. Being pre-approved will make better use of your time and your Realtor’s. In today’s market, you may not even be allowed to look at certain homes if you haven’t been pre-approved yet.
Step 3: What Is The Escrow Process Like?
In step 3, escrow begins to take place. Escrow is an agreement between two parties that is held by a third party. In the case of buying a home, it is between a buyer, a seller, and is being held by the title company. A typical escrow period lasts between 30-45 days and is something you set in the initial purchase contract with the seller. During that time, the lenders are in the underwriting process and waiting for things like the inspection and appraisal to be completed. The underwriter is an employee of the lender and reviews things like your income, loan, credit report, and more. If the buyer does not provide the necessary documents to the underwriter, it can push back the close of escrow.
Like previously stated, the appraisal is order during escrow. Although, the appraisal is not order by the buyer or borrower, it is actually order by an appraisal management company. The appraiser will be an unrelated third party who determines the current value of the property. They will evaluate things like the swimming pool, layout of the property, and even walk through each room to determine the condition.
Step 4: What Happens After You Close?
Once you’ve closed escrow, you will now have a large sum of debt in your name for the next 15 to 30 years. Don’t let this scare you! You have been prepared by your loan officer and have made sure that this is an amount that can fit in your budget. You will need to talk with your loan officer or a broker and make sure you have a servicer. A servicer is someone you will be making your payments to. Although, servicing can change throughout the life of the loan, but you should always be notified of this change.
One of the most common questions about loans payments is: Will I get penalized for paying off my loan early? And the answer is no, not typically. Most people will not have a prepayment penalty for paying more towards the loan each month.
And lastly, remember that your mortgage payment covers things like your principal and interest for the loan, taxes, and insurance. Things like HOA dues are NOT part of this payment. Those will be separate payments to the HOA association in your area.
We hoped that we answered that endless list of home buying and lender-related questions for you! But, if you want to make sure we’ve covered it all, be sure to watch the #AskALender with JFQ Lending, Inc. here: https://youtu.be/BsL9vR7QFCo.
Also, make sure to support JFQ Lending, Inc. by visiting: https://jfqlending.com/
Until next time,
The Myriad Team