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Day 15: Your Collateral
Day 16: Mortgage Insurance
Day 17: Compliance
Day 18: Your Home Team
WEEK 3: The Home Loan Process
Today’s Easy Financial Task: Learn the steps of the homebuying process and collect all the documents you need.
How to rock this task:
- Read through the stages of homebuying
- Create a digital folder to store the documents you need.
Welcome to the last day of this week! After today, you’ll have two days to review what we’ve covered thus far. Today I’m going to give you an overview of the homebuying process!
The Home Loan Process
Here are the steps to buying a home:
- Get your documents together. Putting your financial documents together beforehand helps you speed up the application process. (We’ll talk about the documents you need below.) Lenders and agents prefer to work with borrowers who have their stuff together.
- Shop around for a mortgage and get preapproved. Often people go right into the home search first, but getting preapproved for a mortgage first has its benefits. A preapproval is when a lender conditionally approves you for a home loan. They check your credit, income, and other documents to give you a conditional amount that they’re willing to give you in a preapproval letter. You can take this letter with you when looking for an agent and show sellers. A preapproval shows that you’re serious about buying.
- Choose an agent and start looking for homes. An agent will help you look for homes. They can also give you advice about the housing market and may have the inside scoop on home listings.
- Put in an offer. When you find a home, the agent will help you put in an offer.
- Respond to any counteroffers. Homebuying can include negotiations! The seller of the home may come back with a counteroffer. You and your agent can decide whether to accept the offer or issue another counteroffer. This is when some back and forth can happen! Don’t get discouraged!
- Do a home inspection. Your home inspector will do a review of the home to see if there are any defects like an old roof or insect damage. Typically, an offer is contingent on a home inspection. This means that you’re making an offer with the understanding that you can back out of the deal if the home inspection isn’t up to par.
- Home Appraisal. The lender does the appraisal to determine the value of the home.
- Your lender will process the loan. Your loan preapproval is not a final approval. The loan will go through underwriting to give you a final response. If all goes well, you’ll get a closing date!
- Final walk through. The final walkthrough is the last chance for you to make any final requests about the home.
- Home loan closing. Today is the big day! Closing is when money (down payment and any other required funds) exchange hands. You sign final documents and get the keys to your home!
The Documents You Need
The last step today is to assemble the documents you need to give to your lender to get preapproved. Here are some documents to get together:
- W2s and pay stubs
- Other proof of income (aka pension income, social security, child support, alimony)
- Tax returns for two years
- Rental history
- Bank statements for a two month period
- Debt account statements
- Investment accounts
- Profit and loss statement if self-employed
The great thing about starting your digital folder is that you can always keep it updated. Not ready to buy a house within the next few months or even a year? No problem. Just keep adding to your folder. When you are ready to buy, you’ll have the stuff you need organized.
We’ve reached the (ALMOST) end of week 3! Woot woot!
At this point, you should feel more confident in your knowledge of what’s required to buy a home. You should also know the steps of homebuying and people who help you along the way.
Leave a comment below or reach out to your accountability partner(s) if you have any questions. Don’t forget to check into the Dream Catchers: LIVE RICHER group as well.
Share what you’ve learned today with your tweeps:
You can reach out to me here:
Facebook: The Budgetnista
Private Forum: Dream Catchers : LIVE RICHER
Want to work through the Live Richer Challenge: Homebuying Edition in a workbook? It's part of a bestselling series!
Click the link below and get your copy.
P.S. If you haven't already... Get your Challenge Freebies from our Live Richer Challenge: Homebuying Edition coauthor, Netiva Heard. Click the pic below if you'd like to learn more about Netiva's services. You'll receive a discount! Just let her know you're a Dream Catcher.
P.P.S. Here’s a copy of the Challenge Calendar. It’s a fun way to keep track of your progress.
P.P.P.S. Don’t forget to get your free Live Richer Challenge: Homebuying Edition Starter Kit. Download it HERE.