The Mortgage Process
Step 1 of 6
Preapproved vs Prequalified
Welcome to the Chissell Mortgage Group home buying process walkthrough! This is going to be part 1 of our 6-part series about how the mortgage process will unfold. The purpose of this walkthrough is to makes sure that our borrowers are well educated on what to expect at each step of the way.
This is the most important step of the entire mortgage process.
Getting preapproved!
There is no point in looking at homes if you do not know what you qualify for. You are not only wasting your time, but you are also wasting your realtors time and the seller’s time. Getting preapproved is fast, easy, and most importantly free!
We run it through an automated underwriting system, which tells us if the lender is willing to accept the loan or not. It will provide you with a sales price, monthly payment, and total cash to close necessary to purchase the home. It will also give you peace of mind that you are truly qualified to purchase a home. No bait and switches here.
Now, you may not be ready to purchase a home. You just want to get some information regarding the mortgage process, maybe even get an idea of what a ballpark rate and monthly payment may look like. Totally fine! That would be considered a prequalification. For a prequalification, we do not pull credit. We also do not run it through that automated underwriting system, so you cannot use it to put in offers on a home. However, this will give you somewhat of an idea what the numbers look like and your potential buying power. Once you’re ready to start shopping, we’ll want to take you from prequalified to truly preapproved. This way, we don’t have any surprises pop up during the loan process and we can have a smooth, boring transaction!
If you like to learn more about the mortgage process or have any questions about mortgage financing, give us a call at the office at 727-376-6900.
Step 2 of 6
Finding the Right Realtor and Home
After getting preapproved, the next step in your home buying journey will be finding a realtor. This home your purchasing may be your largest financial asset, as well as the largest indebtedness you may ever have in your entire life. Suffice to say it’s a big deal!
You do not want to trust your financial future to your second Cousin Billy who just passed his real estate exam last month. You want a local, experienced, knowledgeable, and professional real estate agent that is going to give you the best chance of success. If you’re in need of a real estate agent, we would be more than happy to recommend some local experts to you.
Now that we have a local real estate specialist fighting on our behalf, the next step will be finding that home of your dreams!
Understandably, your real estate agent will send you homes that come on the market that fit your specific parameters. Once you find a home you are interested in, that is when that real estate agents’ job really starts. We want to put our best foot forward on our offer to have the highest likelihood of winning the bid!
If you like to learn more about the mortgage process or have any questions about mortgage financing, give us a call at the office at 727-376-6900.
Step 3 of 6
Executed Contract
Congratulations! Your realtor has presented your offer to the sellers, and the sellers have agreed to your terms and signed. We have won our offer with the sellers and now have a fully executed contract. Here is where the ball really starts to get rolling.
Now, there are 6 important dates on a contract. We have a video specifically on these dates, available on our Youtube and blog. However, I will also cover them in detail below:
#1 – Earnest Money Deposit
Also referred to as a “Good Faith Deposit”, the Earnest Money Deposit (EMD) funds are given to the title company at the beginning of the real estate transaction.
These funds signify that the buyers are serious about purchasing the property. The standard time frame for the EMD is 3 days from when the real estate contract was signed and executed.
#2 – Loan Application Date
This date refers to when the borrower makes a loan application with the broker or lender. On a standard FARBAR contract, the loan application date is within 5 days of the executed contract. Hopefully, you have already reached out to your broker to get preapproved before putting in the offer!
#3 – Inspection Period
Another important contract date is the number of days given for the inspection period. The standard timeframe is 15 days. These inspections can include your home inspection, 4-point inspection, radon test, pest inspection, septic inspection, well inspection, pool inspection, etc.
#4 – Loan Approval Date
The Loan Approval date is typically 30 days from the time you sign your contract. This date is especially important, as it can have financial implications on your EMD funds. If you do not meet this date, you could lose your EMD to the sellers. Big deal!
#5 – Title Commitment Date
The Title Commitment Date is the period in which we need free and clear title for the closing. This could be between 5-15 days prior to closing the loan.
#6 – Closing Date
The big day! The closing date on the mortgage is the expected day for the loan file to close. This is typically between a 30-60 day closing period.
If you like to learn more about the mortgage process or have any questions about mortgage financing, give us a call at the office at 727-376-6900.
Step 4 of 6
Home Inspection and Home Appraisal
Once your contract has been fully executed, the realtor is going to assign a home inspector to inspect the home in question. They will investigate the structure of the home to see if there are any deficiencies with the plumbing, heating, A/C, foundation, etc.After getting preapproved, the next step in your home buying journey will be finding a realtor. This home your purchasing may be your largest financial asset, as well as the largest indebtedness you may ever have in your entire life. Suffice to say it’s a big deal!
This is a very detailed and thorough inspection, which typically takes a few hours to do and write up. You should receive the report within a day or two of the home inspection. Then after receiving the report, talk with your real estate agent to see if you want to proceed with the contract with the home in its current condition. We would always recommend our buyers to get a home inspection, as they are worth their weight in gold! You may find some type of deficiency with the home that may give you and your realtor some leverage and negotiating power.
The home appraisal works a bit differently. The processing team working on your loan will order the appraisal on your behalf to see what the value of the home is. The typical cost of an appraisal ranges from $500 to $650 but could be more depending on the size and uniqueness of the property. The process normally takes about 1 to 2 weeks for the appraiser to accept the job, schedule a meeting date with the sellers, inspect the home, and write the report. The report will use the comparison approach by comparing your home to the closest 3-6 homes that have similar features to yours. The appraised value is important since the lender will only lend on the appraised value or the sales price, whichever is lower. Also, the home inspection and the appraisal are fees are paid up front, not at the closing table.
If you like to learn more about the mortgage process or have any questions about mortgage financing, give us a call at the office at 727-376-6900.
Step 5 of 6
Processing and Underwriting the Loan
Just as a quick recap, once we have your pre-approval in step 1, we will send you a list of the documents that are needed for the mortgage process. These documents will be required by the underwriter and are crucial to prove that everything on the application is true and correct.
It is vital that we get your loan documents as soon as possible, preferably before we even put in an offer, so we can make the transaction as seamless as possible. Once we receive your documents, we will do data integrity on your loan file, and send it to our processors. The loan processors will put the file in a specific structure for the underwriter to review. He or she will then submit the file to the underwriter, who will examine the initial documents and application.
After they review the file, we will receive a loan approval with conditions. A loan approval with conditions means that the underwriter is prepared to approve the loan, if we can provide the necessary conditions they are asking for.
You will then work with our processor to get the items request by the underwriter to keep the loan moving. This is a watershed moment in the mortgage process. This process can take a few days or a few weeks depending on how fast you get our processor the conditions requested. The onus is solely on you, as the borrower, to get the requested documents over as soon as possible.
Our hands are tied until you provide the necessary items. Once we have submitted all the requested items to the underwriter, and the underwriter has no more questions, they will issue a clear to close. A clear to close means that the underwriter has fully signed off on the loan and we will be starting the closing procedures. Typically, this process can take 3-4 weeks, but could be faster or slower depending on how fast you as the client move.
If you like to learn more about the mortgage process or have any questions about mortgage financing, give us a call at the office at 727-376-6900.
Step 6 of 6
Final Steps to Closing
We are so close! We have our clear to close and we are getting ready to go to the closing table. The title company is responsible for coordinating and dispersing all funds properly.
We will send the title company your loan package up to 2 days in advance before the closing date. Typically, around this time, the title company will send you wiring instructions for closing. ALWAYS call the title company to confirm the wiring instructions. Wire fraud is a real thing. Who knows if someone’s email account has been compromised or hacked? If you wire those funds to the wrong account, there is no recourse to help you.
Those funds are gone. Therefore, it is crucial to pick up the phone and call the title company directly to confirm their wire instructions. Thankfully, none of our clients have ever had an issue with wire fraud. We stress the importance of this process because we do not want any of our clients to become a statistic.
On the day of closing, please bring your ID to closing. Also, in the state of Florida, if you are purchasing a primary residence, your spouse must sign at the table acknowledge you are taking out a lien on your primary residence. If they do not sign, we cannot close. Prepare your wrists, as you will have a litany of documents to sign.
Once you are done signing the documents at the closing table, the title company will upload the documents to the lender. They will review to make the documents were completed properly, which typically takes around an hour. Once the lender completes their check, the title company will be able to disperse funds and you are a new home buyer. Congratulations! You are the brand-new owner of the home!
If you like to learn more about the mortgage process or have any questions about mortgage financing, give us a call at the office at 727-376-6900.
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