There are several major distinct steps in the real estate purchase process, and several relate to the mortgage. It can be confusing for both first time and experienced home buyers. This blog offers important information about steps in the financing process for buying MA real estate and includes what you may want to know prior to beginning the process.
Steps In The Financing Process For Buying MA Real Estate
Pre-approval
A pre-approval is an introductory review of your financial information and credit report to determine what you may be able to obtain for a loan. It ensures that you meet the primary requirements for a loan. Pre-approvals do not guarantee that you will ultimately receive a mortgage, but is a typical first step in the mortgage process.
Mortgage Application
An application occurs typically after you have an agreement to purchase a home. You may be required to furnish additional financial paperwork and information. The details on the property are also submitted to the lender for review. They will request a copy of the Purchase and Sales agreement in order to proceed. Your contract may specify that you complete an application before a specific date.
Home Appraisal
An appraisal is mandated by a lender (although you are typically billed the fee for it) to identify the current market value of the real estate. Appraisers will compare your property to others that recently closed in the area within a specific time period. An exact dollar amount is noted. Basically, the value of the real estate must satisfy the amount that the bank is loaning to you.
Commitment
After your financial information and the property details are reviewed, the lender provides a commitment letter. This confirms that no major issues have been identified and that the mortgage company is fairly certain that the loan will receive full approval. There will be a few conditions included in the letter such as an employment verification and last credit check. Therefore, it is important not to make significant purchases or alter your financial situation even after a commitment is issued as it may lead to a fall thru.
Clear to Close
A clear to close is essentially the final approval of a loan. It indicates that all requirements have been completed and that the mortgage company can send the file to the closing agent. This may take place merely days or hours before the anticipated closing date.
The Closing
The closing includes signing of documentation and filing of paperwork into public record. Always bring proper identification and a money order or bank check for any monies due. Personal checks or cash are generally not acceptable. The transfer of money takes place at or immediately after and the real estate becomes officially yours!
Some Extra Advice
Deadlines are a critical facet of any real estate transaction, so make sure that you understand the deadlines and what you must provide to satisfy each one. Getting representation from a experienced mortgage professional and real estate professional is a huge help. They can offer advice and support, monitor deadlines, and make it a more positive experience. As a local loan professional, I can with your lending needs. Contact me, Christopher Graves, at Emery Federal Credit Union via 781-759-1200 x22 or christopher.d.graves@gmail.com.