Understanding the Mortgage Process
Your Mortgage Timeline: From Offer to Closing
Buying a home can be one of the most exciting but daunting times of your life. It’s likely the biggest purchase you will make and our team knows how overwhelming that can be. Our team members are here to guide you through each step of the mortgage process to ensure you score your dream home while also making sure you understand the steps of the process.
The lender you choose for your home mortgage is important. They will not only guide you through your home buying process, but will determine your level of service after the deal is closed. Midwest Heritage is your local, central Iowa lender that is dedicated to providing you with the type of service you’d expect from a Midwest company. Plus, we keep the servicing of your loan right here at the bank and do not sell your loan to another company after the closing. This simplifies your payment process and makes it easy if you have any questions down the road.
While the timeline for closing will vary depending on the type of home mortgage loan you’ve chosen, the process typically takes about 35-45 days. The following step-by-step guide below will you give a good idea about what you can expect while waiting for closing. If you have any questions about the mortgage process, don’t hesitate to reach out to our team.
Step 1: Pre-Qualification
Before the official mortgage timeline begins, it’s important in today’s hot market to receive a pre-qualification letter so that sellers know that you are pre-qualified to buy their home. This will also help you determine an appropriate price range for your home search. Once you have your pre-qualification and have found a home you love, you’ll move on to step two.
Step 2: Make an Offer
Once you’ve found your dream home, your real estate agent will help you complete a purchase agreement. This document includes items such as the sales price you’re willing to pay, your down payment amount, the targeted closing date, any items included with the house, and which party is paying the closing costs. This process may last a few days, depending on other offers or negotiations between you, the buyer, and the sellers. Once all parties have come to an agreement, you’ll move on to step three.
Step 3: Mortgage Application & Disclosures
After you have a signed purchase agreement, your Mortgage Advisor will prepare your loan application and disclosures. The disclosures will include a loan estimate, which lists out estimated closing costs, pre-paid items, interest rate, and the monthly payment for your loan. You will review and sign your application and paperwork. Your Mortgage Advisor will then finalize your loan for approval.
Step 4: Home Inspection
While you wait for the final mortgage application to be approved, you will continue on in the home buying process. This includes getting a home inspection, if you so choose. Depending on the results of the home inspection, you can work with your real estate agent to negotiate anything that needs to be fixed. The home inspection is one cost that can be overlooked when budgeting to buy a home. We recommend budgeting around $500 for a home inspection. This includes inspecting electrical and mechanical parts of the home, along with radon testing and a sewer scope.
Step 5: Appraisal
Once the final negotiations are settled in the way of the home inspection, you’ll move to the Appraisal phase. The time it takes to get an Appraiser to your home and to complete their appraisal report can vary based on your location and the type of property you are purchasing. During the appraisal process, the Appraiser will determine the fair market price for your home based on aspects like square footage, bedrooms and bathrooms, and what similar listings have sold for in the recent months. If your appraisal is over what you’ve negotiated for the house – congrats! That means you’ve scored a great deal. However, if the appraisal is far under what you’ve agreed to pay for the home, that can cause concern regarding overpaying for the property and may require re-negotiating the purchase price with the seller or dropping out of the transaction altogether.
Pending an appraisal that ensures you want to move forward with buying the house, you will next want to provide your loan advisor with the home owner’s insurance policy that will be put in place once you close on the loan. Coverage will need to at least equal the loan amount and it is recommended to get enough coverage for full replacement cost. Our Midwest Heritage Insurance company will be happy to provide a free quote as well.
Step 6: Final Approval
The appraisal and any loan conditions will next go back through underwriting for review and a final sign off. Once you have your final approval from underwriting, you’ll receive your Closing Disclosure. This is a recap of your final loan terms, closing costs, and pre-paid items, which your Mortgage Advisor can walk you through. Upon receipt of the Closing Disclosure, you’ll have a mandatory three-day waiting period before the loan can officially close. It’s also during this time that your employment may be verified to ensure you will still be able to pay for the requested loan amount. After three days, you’ll move to closing.
Step 7: Closing
After the three day waiting period, you’ll have an appointment to sign your loan documents! It’s at this meeting that you will bring the check for your down payment and sign all of the paperwork to make the home yours. It’s also at this meeting that you will receive the keys to your new home! Once the loan funds are received, the documents get recorded at the county recorder’s office. Within about a week after closing you will want to request the homestead exemption for your owner occupied home with the County’s recorder which can often be done online. You will also be contacted to pick up your home’s abstract document which you will want to keep in a safe location such as a safety deposit box as they are very costly if one needs to be replaced.
Step 8: Enjoy your home for many years to come!
If you’re looking for a local lender that can make quick decisions to ensure you score your dream home, contact a Midwest Heritage Loan Officer today or complete an online application!