Loan Purchase Timeline
1.) Get prequalified
I advise a buyer to get prequalified before anything else. This puts the buyer into a “ready” position. Even in a bad market, a house may be priced competitively enough to warrant fast action. If you’re already working with a Realtor®, ask them to refer you to a good loan officer. Otherwise, ask friends or family.
2.) Talk to a financial advisor
This is an optional and very underutilized step in the home-buying process. A financial advisor can put your purchase into short-term and long-term perspective for your goals. They may be able to recommend an investment or life insurance to help protect the investment in a home that you are about to make in purchasing a home. Again, ask for a referral.
3.) Hire a Realtor®
You can put a Realtor® to work for you often at no additional cost to you since the buyer’s agent is often negotiated to be paid a commission by the seller. Do not call on the sign–unless its mine :-P. Hire a Realtor® who practices Buyer Agency, meaning they hold YOUR interests above all others. They can help you find a home, and they can help you in facilitating the transaction.
4.) Screen potential homes
A Realtor® should set you up on an online search of the local housing database, or Multiple Listing Service, matching houses to your specified criteria. This is going to be the most effective way of searching for a home since these listings are kept current and are complete. Many services now allow you to login and organize your list of homes matching your criteria. Look at pictures and view neighborhoods to decide which ones resonate with you.
5.) Tour properties
Choose the houses that you would like to see in person and communicate this to your Realtor®. Be liberal with choosing these houses as a house may show better in person. The more houses you see, the more educated you will become with the market, and therefore, the more comfortable you will be in moving forward with “the chosen house.”
6.) Make an offer
Before you make an offer, ask any outstanding questions you may have about the house. You will have an opportunity to inspect the house after an offer is accepted, but if something is suspicious or unclear beforehand, save yourself some time by asking your Realtor to get clarification from the Listing Agent. Then, direct your Realtor to forward information on the house to your loan officer. Both your Realtor® and loan officer will provide you with an estimated cost sheet that shows the amount needed to complete the transaction and an estimated monthly payment. Make sure you warm-up your hand before writing an offer (unless using electronic signature). The PAR Agreement of Sale is 19 pages! Hopefully your offer is accepted!
7.) Mortgage Application
Outlined in your Agreement of Sale (offer) is a deadline for you to make mortgage application. In the PAR form, the default deadline is within 7 days of ratification. This requires you to meet with your loan officer and fill out, yes, more paperwork.
8.) Title Search
You may hire or you may ask your Realtor® to hire someone to do your title work and closing services. This step ensures that the property is legally yours when you settle on the property and the property will be free of prior liens.
I advise my buyers to make their offers contingent upon findings in inspections of their choice. Inspections are done on behalf of the buyer. Different inspections include a Whole House Inspection, Wood-Destroying Insect Inspection, Radon Inspection, Septic Inspection, and many more. In the Pennsylvania Standard Agreement of Sale, the default “Inspection Contingency Period” is 10 days from the day of ratification. This means that the buyer must inspect AND reply to the inspection in written form to the seller. While the buyer will get a report, I advise buyers to attend the inspection so they can ask questions and better understand the home.
The appraisal is done on behalf of the mortgage lender to make sure they are not lending an amount of money that exceeds the value of the home. An Appraisal can be done at a number of different times in a transaction, but I have found that the best practice is to have the loan officer order the appraisal after the inspections are done and negotiated. This saves the buyer from having to pay for an appraisal if the inspections “kill” the deal.
Your mortgage lender will require you to obtain home owner’s insurance on the home to protect their (and your) investment. Many buyers use the same insurance agency in which they purchase their auto insurance. If you aren’t sure, ask your Realtor® if he or she can recommend an insurance agent.
12.) Transfer utility services
Utility services should be transferred into your name on day of settlement. Some services will not allow you to transfer until the current owner has requested a transfer. Call within 3 days of settlement. If you are getting cable and internet service, you may need to schedule an appointment 2 weeks in advance to ensure service on move-in day.
13.) Pre-settlement walk-through
On the day before settlement, or hours before settlement, the buyer should conduct a walk-through to ensure that the house is in the condition agreed upon in the contract, and that all items included in the sale are present.
All parties come to the table, and the deed and title to the property is transferred– you become a home owner! Make sure you bring ID and by this time, your hand will be well conditioned for the paperwork involved.