Real Estate Buyer’s Guide
Loan Qualification
The first thing a buyer of real estate needs to know is their price range. See this article on buying power to help determine the amount you would qualify to buy.
This article basically discusses how lenders determine the amount a person can qualify to borrow. You might also look at the Basics of Loan Qualification which discusses its three parts.
Mortgage Insurance
Further, you may want to understand a little about mortgage insurance if you do not have 20% of the purchase price for a down payment. If funds are limited, you may want to consider asking the seller to pay for some of your buyer’s closing costs which are discussed.
As you can see, the lending process is complicated and ever-changing. We recommend locating a lender you like and trust. Lending, we believe, is a personal service that demands a one-on-one relationship. We suggest buyers hire a local lender. If you need any help in this regard let us know.
Looking for the Right Home?
After a price range and the terms needed to be included in the offer are established with the trusted lender it will be time for the fun part; shopping for a home that meets or exceeds a buyer’s needs.
This is where great real estate brokers can make a huge difference in finding the right property. A great real estate broker listens to a buyer’s needs and goals.
This would probably be a real estate broker that is full-time, informed, and knowledgeable. It is a real estate broker that cares about its clients and their needs.
Underwriting
Underwriting is done by a person or persons insulated from influence by all including the lender. The time it takes an underwriter to review a loan package can vary and sometimes the process can be backed up due to volume which can add to the review process.
The time involved can be 48 hours to weeks if there are issues found with the loan package. Underwriters are the checkers of the transaction. They review all aspects of the transaction from the buyer to the property and make sure the transaction meets the lenders and general aspects of the type of loan the buyer is obtaining.
When a loan is in underwriting potentially the underwriter can and typically does ask for additional information about the buyer or property. Underwriters have full authority to deny a loan if any aspect of the transaction does not meet lender and government requirements.
Once the loan is approved by the underwriter it will be ready for the documents to be prepared and sent to the closer.
Property Inspection
After a desirable property is found an offer will be written that includes the terms for the purchase per the lender’s instructions. Here’s where great real estate brokers can shine because they provide the buyer with comparable sales that show the value of the property, so the buyer makes an informed decision.
Drawing Docs
The preparation of documents to be sent to the closer for review and signatures is typically called – “Drawing Docs.” This process typically takes about 24 hours.
This is one of the final aspects of the loan process prior to obtaining signatures for the parties involved in the transaction. It is the process of preparing all lending documents to send to the closing office.
Lending Documents (escrow).
Once the loan documents are received by the closer (a neutral party) they are reviewed and prepared for signature. Any additional documents are prepared by the closer. The closer then calls all parties and schedules an appointment to review them with the buyer and seller and get their signatures.
Buyers and Sellers sign and review the documents separately making sure they meet their understanding of the transaction.
John Moore will always be at the signing to make sure everything goes smoothly and that all questions are answered. Once everything is signed and approved the documents are sent back to the lender for final review.
This process also ranges in time depending upon the schedule of everyone involved. But it can happen the same day the documents are received if everyone has the time including the escrow officer.
Final Review by Lender
After loan documents are received back from the escrow officer, they will review the documents to make sure they have been completed and signed properly. This can be on the same day or the next day. It depends upon the lender.
If it is taken care of on the same day, they call it “table funding” which basically means they may be able to fund and record the same day they receive the documents for review and the same day the documents were signed by everyone.
This can be an important question the buyer will want to ask the lender because it can make the difference in closing sooner than later. The question to the lender is “Can you table fund my transaction.”
It may or may not mean that the transaction will close the same day because there are other considerations, such as the time of day everyone is signing.
But if a buyer wants to get the keys as soon as possible it can be an important question. Once the documents are reviewed and credit is re-checked by the lender (do not buy anything on credit prior to this process or I may be denied the loan) and found without changes the loan is approved and funds are sent to the closer.
Closer Funds and Records Transaction
When funds are received by the closer the property’s Deed of Trust is sent to the county for recording into the buyer’s name. A check is written, or a wire is made to pay off any outstanding loans the seller has on the property.
A check or wire is prepared for the seller as instructed. Once the property is recorded in the buyer’s name a call goes out to all parties letting them know that the transaction is completed and that funds, if any, are available to the seller.
In Washington state, the seller has until 9:00 PM the day of recording to be out of the property. If the seller is already out the buyer may be able to get keys and assess the property upon recording.
