Does anyone know the basic steps to getting a mortgage?

posted 2 weeks ago in October 2017
Post # 3
Member
556 posts
Busy bee
  • Wedding: July 2018

blackrosegirl :  The dollar amount you put down is irrelevant, what is important is the down payment in relation to the property value and as a percentage of your salary multiple. No one can tell you if 20k is enough. 

The first step is to get pre apparoved so you know what you can borrow, add that to a 10%+ deposit and that’s your budget.  However then you need to look into associated fees and costs which will depend on your area and are typically based on the purchase price. 

Post # 4
Member
506 posts
Busy bee
  • Wedding: June 2018
  1. Pay off any outstanding credit you can
  2. Ask friends and family for recommendations for realtors, banks, inspection, and contractors
  3. Go to a bank to get prequalified, see what programs you may be eligible for.Decide that they have qualified you for wayyyyy too much money, and look for a house that is less expensive than that.
  4. Go look at houses, and absolutely do not buy the first house you see without looking at other houses
  5. Find house that works in budget, make an offer, based on contingencies
  6. Once your offer is accepted, you absolutely should hire a home inspector. The home inspector will help you figure out what you can ask the current home owner to fix/repairs if any are needed, and gives you leverage at the bargaining table. (I purchased my first home on my own, and had the home inspection done before I made an offer)
  7. The bank does a whole bunch of mumbo jumbo on their end to figure out how much of a downpayment you need, and what the closing fees are. You may be able to negotiate some of the closing fees. If you have qualified for a first time home buyer loan, you may not need a down payment, but you will need closing fees. Mine were around $2k
  8. Go to the title company, and close on your new house.

I never used an attorney; it was up to the seller to come up with the contract based on the agreed terms. I read over the contract and made sure it was the terms agreed upon, and we went from there. As near as I can recall, this was the steps to purchasing my first home.

As far as a downpayment, $20k would be 10% on a $200k home, so it just depends on how much you are willing to spend.

Post # 5
Member
383 posts
Helper bee
  • Wedding: May 2018

1. Get prequalified. At this point, I wasn’t too picky about rates as they can change daily. Just needed the letter that realtor’s tend to require to show you houses. They want to see proof you can afford the houses you want to see so nobody is wasting their time.

Personally, I recommend being able to put 20% down so you don’t get involved in escrows. Closing costs can be in the neighborhood of $7000 (that’s what mine was).

An offer is made and accepted before it gets inspected. After your offer is accepted, you have about a week to have an inspector look at the house and let you know of any issues. The contract you signed will have terms (such as the seller is responsible for roofing, plumbing, electrical issues) and then you negotiate what you want them to fix.

Post # 6
Member
4492 posts
Honey bee
  • Wedding: December 2014

This is how it worked for us…

Found mortgage broker > Got preapproval > Found realtor > Found House > Made Offer > Offer accepted/Contract signed (pay deposit) > Mortgage paperwork/underwriting (this was happening during the following steps) > Inspection > Renegotiation based on inspection > Appraisal > Renegotiation based on appraisal > Cleared to close by mortgage company > Close on House (pay closing costs)

This is how it worked for us in Florida, however, different states/countries have different processes. My boss is buying a house in New Jersey and has had to deal with a bunch of other stuff. 

For us, our mortgage broker and realtor were invaluable in walking us through the process. 

As far as downpayment, that is totally dependent on the value of the house, your income, what type of mortgage you are getting, etc. 

 

Post # 7
Member
1243 posts
Bumble bee
  • Wedding: May 2017

blackrosegirl :  From my experience, you go and get pre-qualified. You can either have them check to see if you qualify for a certain $$$ amount, or they can do a maximum. I would not suggest buying in your maximum – each time my maximum was way over what I would actually be able to afford and live comfortably.

You can check different banks to see what their interest rates are – and all interest rates are dependent on your credit score. If your score is 740+, you should qualify for the best rate they offer at most banks. I checked around at 5-6 different banks and went with the best rate and the one that would work with me the most on closing costs. There will also be different rates dependent on the type of loan you do. A 15 year loan will have a lower interest rate than a 30 year. If you put 20% down you will also have a lower rate as you will not have to pay mortgage insurance (this is completely different from homeowners insurance). You can choose to do an escrow account to make all of your payments come out of the same account (house payment). Your house payment will consist of your mortgage payment, property taxes if applicable, homeowners insurance, and if you do not put down 20% you will most likely pay mortgage insurance for awhile too.  Or you can pay all of these separately if you don’t want to escrow them (I do not escrow but a lot of people do – some banks may make you escrow as well – especially if you cannot do a conventinal 20% down pmt loan).

Once you find a house in your price range that you like and want to potentially buy, you will write up an offer with your agent. They will work with the other parties agent to negotiate and see if the seller is willing to take your offer, or if they want to counter offer. Typically you will have to write a check for earnest money at the time of putting in an offer. This is basically to confirm your contract and show the buyer you are serious. This check will come out of the amount you pay at closing. The only way you would lose your earnest money is if an offer is accepted and you end up backing out of the sale for some reason that is not due to a bad inspection. My escrow amount for my first house was $500, and my second house was $1200. It depends on the area and realtor company you deal with. Some have a base amount, and some go based off of a percentage (1-3%) of the price for the house.

Once your offer is accepted, you can have an inspection done – if there are any serious issues (or non serious issues that you want them to fix) you can re-negotiate your contract, or void it as long as you put your offer in contingent on an inspection. In my state you have 10 days to have your inspection done and to make any changes or back out, or you will lose your earnest money. You will typically have 30-45 days before you actually close on the house. This will give the bank time to get everything in order, and will give the sellers time to get things in order. You will normally select a closing date when you are working with your realtor on putting in an offer – but that can be subject to change (it’s normally… “we will close on or before X date”). On the day of the closing, you will have to pay closing costs plus your down payment. My closing costs were around $2k for my first home, and around $1700 for my second home. Also, the seller may have to pay you for property taxes depending on if they have been paid for the previous year yet, and depdnding on how far you are into the year. This will come out of your down payment/closing costs. Your earnest money will also come out of this. 

You will get to do a walk through of the house the day of or the day before closing. ALWAYS do this. I opted out of it for my first house because I had been in there a few days before to move my new appliances (with permission of the seller), so I wasnt worried about anything.. and after the closing I came home to a flooded basement! If there are any issues, you can negotiate at the closing – but after you close it is a done deal. My second house we realized a few of the things we requested to be done were not done, so the seller gave us the cash to fix the issues. At the closing, you will sign tons of documents and you will get the keys right then and there. Your first mortgage payment may be required then, or it may not be due until a month or more down the road. 

Sorry this is lengthy – I just remember how confused I was when I bought my first house so I’m trying to explain the things I found confusing!

 

ETA: I’m in Illnois, so this is how it is here – things vary from state to state or even by city/county. 

Post # 8
Member
1150 posts
Bumble bee
  • Wedding: July 2017

People have very good advice here.  From a personal finance perspective, I would reccommend that you put at least a 10% down payment.  20% is ideal though.  Also don’t underestimate how much closing costs and moving costs will be.  Our closing costs ended up being almost $10k (for a $300k house) when all was said and done.  Definitely more than we expected on top of the down payment.  Save up way more than you think you need first so you’re not left house poor after closing.

Post # 9
Member
40 posts
Newbee
  • Wedding: April 2018

If you work for a bigger company, see if they have a preferred lender program. Mine did and it ended up being the same bank I use anyway. I got a .25% lower rate from them that no other lender would even consider matching plus a $500 gift card back at closing. Definitely worth it! Not only did it save me money but I got a lot of free stuff from Lowes with my gift card!

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