The home purchase process
Step 1 - Get preapproved for a mortgage and determine what payment you are comfortable with.
Most experienced Real Estate Agents will require or at least strongly urge perspective homebuyers to be preapproved for a mortgage before seeing a home or putting in an offer. No reason to have a buyer get excited about a home they don't ultimately qualify for or can't reasonably afford. Even if you happen to see a home you love- A Selling Agent is extremely unlikely to present your offer to the seller without a preapproval letter in hand. Listing agents don't want to be in a position where they accept your offer, have the listing go into escrow, only to have escrow canceled when the buyer cannot obtain financing.
Through us, the preapproval process is easy!
1) Complete an application on our website.
2) Collect the documents listed on our website.
3) Upload the items securely to us on our website or drop them off in our office.
Once we receive your documentation and application -We run a credit report and will send you a preapproval letter in as little as an hour.
If you don't qualify for the mortgage you seek- We will clearly identify Why. Decades of experience give us the ability to identify potential hurdles or problem areas… And to address these problems BEFORE you are in contract to buy a home.
Step 2 - Shop for a home! If you are not working with agent, ask us for our recommendation for a local real estate agent. We've handled a lot of purchase transactions- We often know who the seasoned agents are for a particular area.
If you want to keep your options open with your agents, browse homes on Redfin. We commonly use Redfin when looking for sales information.
If you would like, we can send you automated interest rate updates tailored to your purchase scenario. In can take months to find the right home for you and a lot can change with interest rates and payments over that time. With automated updates there are no surprises when your offer is finally accepted.
Before making an offer, please let us know if there is any HOA dues or Mello Roos we may not have been accounting for when determining your ability to qualify for a home.
Please avoid opening any new credit lines while you search for home. If you have taken on any new debt please let us know asap so we can re-run the numbers and make sure you still qualify for the home you would like.
If your income or employment has changed, please let us know asap.
Step 3 - Make an offer on a home!
Many listing agents (agents representing the seller) want to see a current preapproval letter and buyer agents would like the numbers on the preapproval letter to match the offer. We are happy to update the preapproval letter anytime you or your agent would like.
When you make an offer, consider asking for a seller credit toward closing costs if you don't want to put more than the minimum down for the down payment.
A big portion of closing costs are title and escrow fees. We see many estimates from title and escrow companies and we have found First American Title to be the most competitive. Typically the seller decides which title and escrow company is used, but you can certainly request any title and escrow company you would like with your offer. I would even request an estimate from First American before making an offer and have the seller compare the fees to their preferred escrow company. They might decide First American is the best option as well!
We are not compensated by First American if you decide to work with them, we just see a lot of high title and escrow fees from other smaller title and escrow companies.
We would also recommend working with a local escrow office so you have the ability to go into their office and sign in case there is a time-crunch at the end of the purchase process. If the escrow office is not local there could potentially be delays which can make things more stressful at closing.
Step 4 - Lock in your interest rate after your offer is accepted
Buying a home will likely be the biggest purchase of your life. Because of this, the process will be a little stressful no matter how easy we make the financing process. You will have enough things to think about during escrow that it's nice not to have to worry about your interest rate and payment increasing. This is why we recommend locking your rate upfront after your offer has been accepted and then you can focus on the home inspections and paperwork required for the home loan.
Being a broker, we have the ability to move your purchase loan to a different lender if rates fall dramatically within a couple days of locking. Big Banks and Credit Unions can't offer you that option!
Step 5 - Send your Earnest Money Deposit (EMD) to escrow.
Typically 3% of the sales price is the required deposit for your purchase, but this can vary.
Before sending your deposit to escrow (we prefer that you wire the funds), let us know which bank account (or gift funds) you are using so we are on the same page.
If you have a family member gifting funds and all or part of the gift will cover the EMD, have your family member wire the funds directly to escrow as opposed to sending the money to you and then having you send the money to escrow.
Please call escrow directly to confirm the wiring instructions before wiring the EMD. Sadly, there are people sending fake emails trying to get people to wire funds to fraudulent accounts as of late.
Step 6 - Sign the initial loan disclosures we send you and send us any updated documents we request.
With a purchase it's important to move quickly during the escrow because there are deadlines in your contract that you must make. One deadline is a 17 or 21 day loan contingency. The seller is going to ask you to remove your loan contingency 17 (or 21) days after your offer has been accepted. In order to have a full approval from the lender in 17 or 21 days, it's important that we keep the process moving.
Just because you sign initial disclosures doesn't mean you are committed to the loan or the house for that matter. You still have at least 10 days to back out a purchase contract as you inspect the property and really we would argue you have much more time than that. At least 17 to 21 days in our opinion because you can still refuse to remove your loan contingency.
Once we have your initial disclosures and current income documentation we'll submit your loan application to the lender and depending on what lender we work with we'll have an approval within 24 to 72 hours.
We'll need you to get a homeowner's insurance policy for the new property. Go ahead and make the effective date 10 days before closing and we can adjust the effective date as we approach closing. Having the insurance policy before we submit your file to the lender will expedite the process.
Step 7 - Schedule your home inspections.
Now that you are in contract, it's time to give your potential new home a full examination.
We would recommend finding a well reviewed home inspector on your own instead of taking a recommendation from your agent or certainly the listing agent just so there is no conflict of interest. If you don't mind taking our recommendation, we have home inspectors that we can recommend. Home inspections are paid for by the buyer.
Let us know ASAP if there is something on the home inspection that will require you to cancel the purchase contract. This way we can cancel the appraisal before we pay for your appraisal or before you pay for your appraisal. Agents always want to order the appraisal ASAP, but they aren't the ones paying for the appraisal. Best to make sure all is well with the home before spending additional money on the appraisal.
Pest inspections are typically paid by the seller.
Any other specific inspections, Chimney, heating and air...etc. would be paid by you. Again, please tell us ASAP if there are any findings in the inspections that might jeopardize your purchase.
Step 8 - Order your appraisal
Once you sign your initial loan disclosures your appraisal can be ordered. Depending on the circumstances, either we will or you will pay for the appraisal. If we pay for your appraisal upfront we are then reimbursed at closing by either you or a lender credit (if applicable to the rate you lock).
The lender will require a carbon monoxide detector to be installed on each level of the home and the water heater (unless tankless) will need to be double strapped to the wall for safety.
Step 9 - Your loan is approved by the lender, time to satisfy the underwriter's loan approval conditions.
Even if you are worth millions and you earn millions each year, there is a very good chance the underwriter is going to want some additional documentation or clarification after reviewing your loan application. Try not to take it personally, underwriters are just doing their jobs.
Our lenders typically sell your loans to Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac require that each loan be thoroughly underwritten and properly documented or a lender runs the risk of having to buy back a loan from Fannie or Freddie. Our lenders don't want to lose liquidity by having to buy back a loan so they are going to make sure your file is properly documented.
As long as you gave us all of the documentation we requested upfront, there is a good chance we won't need much more documentation after receiving your loan approval. We may just need an updated bank statement or pay stub. We try to anticipate what an underwriter is going to require and we request all of these items from you upfront - this tends to make things easier toward the end of the process.
Step 10 - Time to sign your Closing Disclosure (CD)
Shortly after receiving your loan approval and your appraisal report we can request your Closing Disclosure from the lender. The Closing Disclosure shows a rough estimate of all of the closing figures. The figures on the Closing Disclosure should be slightly more accurate than your initial Loan Estimate, but the CD is still just an estimate. Figures, like interest due at closing, can be adjusted by escrow before closing.
You must electronically sign your Closing Disclosure 3 days before you can sign your actual loan documents. In general, it's important for you to review and sign all disclosures that come from the lender via email. Again, these are just disclosures there is nothing binding, but in order to stay on schedule and not delay your closing it's important to review and sign disclosures emailed by the lender. We'll remind you when it is particularly important to review a document quickly.
Step 11 -Your loan is "cleared to close" by the underwriter!
Once you send us all of the underwriting conditions we'll send them to the underwriter and the underwriter will hopefully sign off on the documents you sent as well as your appraisal report.
Once your loan is cleared to close we will be comfortable recommending that you remove your loan contingency with the seller. You can rest assured you won't lose your earnest money deposit and you will be in a position to close shortly.
Step 12 - Loan Docs Out
Once your loan is cleared to close we'll have the lender send the loan documents to escrow.
Once docs are in escrow, a notary will call you to set up a time to sign. In general, try to sign as soon as possible so we can do our best to close on the date that you would like.
We'll request an estimated closing statement from escrow and we'll send you an email breaking down the figures on the closing statement. This way you can review the numbers before meeting with the notary and we can go over any questions you might have before your signing.
Step 13 - Wire any remaining closing funds to escrow
Please wire the closing funds to escrow as soon as possible after signing. In general, wiring the funds to escrow the day after signing should be fine.
Confirm the wiring instructions with escrow by calling them directly. We don't want you wiring the funds to the wrong place! Wiring instructions should be included in your loan documents as well.
Please be sure to wire from an account that you sent us. It does not hurt to confirm with us which account you plan on wiring from so we are on the same page and we can avoid asking for more documentation before closing.
If you are receiving gift funds for your remaining down payment please have your donor wire the funds directly to escrow.
Step 14 - Funding Conditions
With a few of our lenders there won't be any additional items required once you sign your loan documents and wire the funds to close, but for some lenders - they may require additional items.
Typically if a lender wants additional items from you as a borrower, it's just an updated bank statement, transaction history, wire receipt or cashier's check receipt.
Step 15 - Fund, record and the house is yours!
Once the lender clears all remaining funding conditions (if any) they will send the funds to title/escrow and the process will officially be done on our end - no more paperwork needed from us.
Once the loan is funded, escrow will record your loan with the County. Some counties like Ventura and Santa Barbara will allow escrow to record the loan the same day ("special recordings") as funding. Other counties like Los Angeles require the loan to be recorded the day after funding.
The day the loan records is the day the home is officially yours. Once the loan records your agent or escrow will hand you the keys to your new home. Congratulations!
Things always seem to pop up on a purchase, but it's our job to guide you through the process and try to make the process as stress free as possible. You should feel confident that we are your best choice for your most important purchase of your life. We look forward to working with you!
We are here to help you
Even if we are not your best choice for a loan, we'll point you in the right direction.