Tag Archives: pre-approved

Steps to Buying a Home

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Buying a home can be an exciting journey. Here are the typical steps to guide you through the process of buying a home in Western New York:

1. Get Pre-Approved for a Mortgage

Begin by obtaining a mortgage pre-approval. This helps you understand your price range and estimated monthly payments.

2. Search for a Home

Start looking for your ideal home. Consider factors like location, size, and amenities that fit your needs.

3. Submit a Purchase Offer

Once you find a home you love, submit a purchase offer. A deposit is typically required at this stage to show your commitment.

4. Seller Accepts the Contract

If the seller accepts your offer, you’ll move forward with the contract.

5. Remove Contingencies

After the home inspection and any other contingencies have been addressed, you can proceed.

6. Apply for a Mortgage

You’ll typically apply for a mortgage within 7 days of accepting the contract.

7. Mortgage Processing

While your application is processed, your credit will be checked, and the property will undergo an appraisal.

8. Receive Mortgage Commitment

You should receive your mortgage commitment within about 30 days from your application.

9. Update Abstract

Ensure that the property’s abstract is updated.

10. Property Survey

A survey of the property will be conducted to confirm boundaries.

11. Water/Septic Tests

If required, water and septic tests will be performed.

12. Send Package to Lender’s Attorney

A package will be sent to the lender’s attorney 4 to 7 days before closing for review.

13. Attorney Review

The lender’s attorney will review the package to ensure everything is in order.

14. Purchase Homeowners Insurance

Typically 5 days before closing, you’ll need to purchase homeowners insurance, including a hazard insurance policy.

15. Final Inspection

A final inspection is done 1 day before closing to confirm the property’s condition.

16. Closing

Finally, the closing occurs, typically 60 days from your mortgage application.

Let this guide you through each step, ensuring a smoother home-buying experience!

How Much Can You Afford?

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Before deciding on the type of home that suits your needs, it’s crucial to determine what you can afford.

Assessing Your Financial Situation

At this early stage, review all aspects of your financial health, including your income, savings, monthly expenses, and existing debt.

Getting Pre-Qualified

Getting pre-qualified for a mortgage loan is a quick way to gauge how much you can afford. However, keep in mind that you will typically need to get pre-approved before purchasing a home. I will elaborate on the difference between pre-qualified and pre-approved in another article.

Importance of Pre-Approval

I recommend getting pre-approved as soon as possible. Being pre-approved allows you to shop with confidence. If you find a home you like, you can quickly make an offer, which also reassures the seller of your financial capability.

Factors That Determine Affordability

Your ability to pay for a home will be influenced by several factors:

  • Gross Income: Your total income before taxes and deductions.
  • Available Funds: Money set aside for the down payment, closing costs, and other miscellaneous expenses.
  • Debt Burden: The total amount of your existing debt.
  • Type of Mortgage: Different mortgages come with varying terms and conditions.
  • Interest Rates: Current rates can significantly impact your monthly payments.
  • Credit History: A strong credit history can improve your borrowing options.

Housing Expense-to-Income Ratio

Lenders often evaluate your affordability using a housing expense-to-income ratio, which assesses your estimated monthly housing expenses—commonly referred to as PITI (Principal, Interest, Taxes, and Insurance).

Every buyer’s situation is unique, and a mortgage professional can help you determine what you can afford. Your income and debts are typically the most significant factors in establishing your price range.

– Matt