Home buying: The mortgage process

April 16, 2017


If you're like a lot of people, 2017 may be the year you trade in renting for home ownership. For most of us, buying a home is the largest purchase we'll ever make. Like any important military mission, if you do your homework and work with the right people, the home-buying process can be a rewarding experience.


Homebuying: The Mortgage Process

Homebuying: The Mortgage Process

Start by doing some research. Compare the average cost of renting versus the cost of home ownership. In many communities, the cost of rent will be more expensive than a mortgage for a similarly sized property. But you can’t just compare rent to monthly mortgage payments. You’ll need to think about everything that could affect your monthly budget.

The true cost of home ownership

There are upfront expenses and ongoing expenses associated with owning a home. The upfront expenses can include appraisal fees, home inspections, down payments and closing costs. These costs will vary from market to market.

As a renter, when something fails, like a dishwasher or air conditioner, you simply call your landlord. As a homeowner, you’ll be responsible for those costs. If you are purchasing an older home, you’ll want to have a good understanding of the condition of the property. Some important factors to considerare the age of the roof, air conditioner, hot water heater and other appliances.

Some property sellers include a free home warranty. Those can provide a sense of security, but remember – most warranties included in a home sale are for a limited time. Eventually you’ll be responsible for the cost of maintaining your home.

If you’re comfortable with the cost of the mortgage and maintenance of the property, then it’s time to speak with a financial institution about getting a mortgage loan so you can take the next step in the home buying process.

Getting a mortgage

Most people approach getting a mortgage with interest rates top of mind. The interest rate on a mortgage will determine how much it will costto borrow the money to buy the property. While it’s important, it’s not the only factor you’ll want to take into account.

For example, if you’re a veteran, you might want to find a lender who’s experienced with the VA loan process. Having a lender who understands how to best meet your needs can make the process much easier and enjoyable for everyone involved.

You may want to find your dream home first, but the best advice is to get pre-approved for a home loan

before

you seriously start shopping.

If you prefer the benefit of meeting with an experienced mortgage loan officer in person, make sure you bring any income and asset documents you might have. What are income and asset documents? Paychecks and tax returns are two of the most common methods to prove income to a lender. Assets can be proven through bank statements, car titles or brokerage statements.

Finding your home

Once you have your mortgage pre-approval in hand, it’s time to find a real estate agent who can be your advocate throughout the process. It’s always a good idea to ask your friends or co-workers which real estate agents they would recommend for the community you’re looking to buy in.

If you’re in the military, having an agent who understands the market and your unique needs is essential to a successful home buying mission.

Paired with a real estate agent you’re comfortable with and can trust, now is when you can start the search process. You’ll be able to determine what you like in a home, and your team (mortgage loan officer and real estate agent) can help you understand how a particular purchase will impact your finances, both in the short and long term.

Once you’ve found a home you like, using the advice of your team, you can make an offer to the property seller. Your bid could be accepted or the seller may make a counter offer.

You’ll need to have the home appraised by a professional once an agreement on sales price is reached. The appraiser will provide a detailed report on the overall health of the home and compare it with others in the area in terms of price and value.

If the appraisal meets or exceeds the price of the loan, you’ll be able to finalize the purchase following the plan put in place by your agent and lender.

Buying a property is an investment in your future. Crafting a plan when you first start the process can make it an enjoyable experience, especially if you partner with those who’re experienced and understand your needs and your goal.

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