Preparing For The Home Buying Process

As thrilling as it is to go looking for a new home, it's even more exciting to finally close on the house that is right for you. When bearing in mind the costs of buying a home, a typical rule of thumb is to prepare to pay at least 10 percent of the house's selling price needed for a down payment and closing costs. Your monthly bills, which encompass the mortgage payment, should be below 40 percent of your gross monthly wages, and your employment or savings should be sound enough to maintain payments efficiently. You can then select who will help you with the buying process.

After choosing which realtor, or attorney is good for you, check your credit report, in order to prepare for your mortgage loan application. Take the required steps for any corrections or disputes, and make copies of all correspondence. For your loan application, in addition to the particulars of any outstanding debts and related disputes, you will also want copies of the following: photo ID or green card, social security card, residence history, employer contact information, bank account contact information, one month of pay stubs, W2 forms, information regarding any assets, and retirement, social security, child support, and divorce decree papers if relevant. If you own part or all of a business, you will want to supply documents pertaining to such, and in the case you are self-employed, you will need to present tax returns. If you have already found a house you are interested in, you will have to include information on it, as well as any documents or agreements that have been written up between you and the selling party, and information regarding the sale of your current home, if applicable.

Within three days of submitting your loan application, you will typically receive a booklet outlining the payment or closing process, in addition to a good faith estimate. The good faith estimate will provide you with a general idea of what all of your home loan costs will be. Remember that it is called an estimate since costs are subject to change depending on conditions, and some fees and requirements may differ from state to state. The loan process involves a few sub-costs, such as for the underwriting, brokering, home appraisal, credit report, and discount (or points) of lower interest rates. Another main cost is for researching the existing title, which will guard you from any potential issues. Other typical costs may be for assumption, which is if you are taking over an existing mortgage; notary and attorney services; survey of the property; and inspections such as for plumbing, codes, roofing, lead paint, and pests. Don't forget that fees may acquire for the preparation of all documents, particularly recording fees for city and state government agencies, as well as the transference of all relevant documents such as the title insurance and an owner's policy, or expanded homeowner's policy.

All loan documents have been prepared, money is in escrow, and any needed repairs have been finished. Once you have done a final check on the property and read through and agreed with the HUD 1 Settlement Statement (which details all cost incurred by you and the seller), you're finished! You should be given a truth in lending report, which outlines all details of your loan, the mortgage papers, the deed, all additional related documents or affidavits, and at long last, the keys!