As thrilling as it is to go house hunting, it's even more exciting to finally close on the property that is perfect for you. When considering the costs of purchasing a home, a typical rule of thumb is to prepare to pay at least 10 percent of the property's selling price needed for a down payment and closing costs. Your monthly bills, which include the mortgage payment, should be below 40 percent of your gross monthly wages, and your employment or savings should be steady enough to maintain payments efficiently. You can then select who will help you with the buying process.
After choosing which realtor, or attorney is best for you, check your credit report, in order to prepare for your mortgage loan application. Take the necessary steps for any corrections or problems, and make copies of all communications. For your loan application, in addition to the particulars of any unpaid debts and associated disputes, you will also need copies of the following: photo ID or green card, social security card, residence history, employer contact information, bank account records and contacts, one month of pay stubs, W2 forms, information regarding any assets, and retirement, social security, child support, and divorce decree papers if applicable. If you own part or all of a business, you will need to supply documents pertaining to such, and if you are self-employed, you will need to present tax returns. If you have already located a house you are interested in, you will have to include information on it, as well as any documents or agreements that have been drawn up between you and the selling party, and information as regards the sale of your current home, if relevant.
Within three days of turning in your loan application, you should receive a booklet outlining the settlement or closing process, in addition to a good faith estimate. The good faith estimate will provide you with a general idea of what all of your home loan expenses will be. Remember that it is called an estimate since costs are subject to change depending on conditions, and some fees and requirements may vary from state to state. The loan process involves several sub-costs, such as for the underwriting, brokering, home appraisal, credit report, and discount (or points) of lower interest rates. Another main cost is for verifying the existing title, which will protect you from any potential conflicts. Other usual expenses may be for assumption, which is if you are taking over an existing mortgage; notary and attorney assistance; survey of the property; and inspections such as for plumbing, codes, roofing, lead paint, and pests. Don't fail to remember that fees may acquire for the preparation of all documents, particularly recording fees for city and state government agencies, as well as the conversion of all relevant documents like the title insurance and an owner's policy, or expanded homeowner's policy.
All loan documents have been prepared, money is in escrow, and any necessary repairs have been made. Once you have done a final walk-through of the property and read through and agreed with the HUD 1 Settlement Statement (which details each cost incurred by you and the seller), you're done! You should be given a truth in lending statement, which outlines all details of your loan, the mortgage documents, the deed, all other related documents or affidavits, and finally, the keys!
