How to sell your home while buying a new one

There are a variety of reasons why you might be looking to sell your home. Perhaps you want to size up or size down depending on your family situation. You may even want to upgrade after a big raise or make a move due to a transfer or career change. If you are planning to sell your home, there are a few decisions you're going to have to make. For starters, do you plan to sell your home while buying a new one? You most certainly don't have to, as some buyers choose to rent out their second properties. If you do however need to sell your home while also purchasing a new one, here is everything you need to know regarding the steps of the process.

  •  Determine the Value of Your Home

You're going to have to figure out what your current home might sell for before searching for a new one to move into. This is because being aware of what your home will likely sell for will allow you to better decide how far you can stretch your budget when looking for a new property.

  •  Discuss Options with Your Lender

Any savvy home buyer will also discuss financial options with his or her lender prior to exploring the markets for a new one. Your lender might actually be able to provide you with tons of helpful advice when it comes to deciding how much of a mortgage you will be able to afford and whether or not you can afford to carry two mortgages at once. When making calculations, don't forget to factor in fees, taxes and insurance payments.

  •  Research the Current Markets

Buyers who get the best deals keep up with the markets. This is because they are aware of just how long properties tend to stay on the market, allowing them to make their move at exactly the right time. Researching the markets can also give you an idea of where you might want to move, what amenities you're looking for and what all you can reasonably afford.

  •  Prepare Your Home For Sale

Once you have established a budget, weighed your options and done your research, you should then be ready to begin preparing your home to enter the market. Make any small repairs that are needed, tidy up the exterior and interior of the home, give your walls a fresh coat of paint, stage your furniture and don't forget to have the property thoroughly cleaned. If you aren't wanting to go through all of the hassle of handling the preparation of your home, you can always hire a professional to get the job done. When the repairs and the de-cluttering are done, you might then want to have the home inspected to ensure you didn't overlook any issue that may come rearing its head later.

  •  Start Your New Home Search

Know how much you want to spend on a new home and have already gone through the process of preparing your existing one? If so, you are now ready to begin searching for a new place. It's recommended you initially keep your search rather broad so that you can get an idea of where the markets are. You can then gradually narrow your home search once you have some kind of understanding of where it is you want to live.

Now What?

            If you have gone through all of the above steps, you are probably wondering what's next. Well, the answer is quite simple. You are now ready to make a deal that works best for your home buying situation. Although you are excited to get into a new home, you should proceed with caution if you still own a home. Here is a look at two different options that can make the processing of selling your home while buying a new one less of a hassle.

  •  Contingencies

A contingency is an agreement that is requested by a buyer in order to provide him or her with protection during the deal making process. Buyers who are simultaneously selling their current home could benefit from a contingency that allows them to move their things into the new property before closing. Don't think there's nothing in it for the seller. Contingencies are often included in real estate deals because they provide the buyer with confidence, thus raising the chances of selling your home at market value.

  •  Temporary Housing

Those who are juggling the purchase of a new home and the selling of their current one are also given the option of looking for temporary housing in order to avoid having to demand an early move-in contingency. As a matter of fact, moving into a rental or moving in with a family member could allow you to hold out for a better deal. This is because you can let your property sit on the market a bit while still being able to shop around for a new place to call home.

            Selling your home while buying a new one can be tricky at times, which is why it's always a good idea to seek the advice of a professional. Depending on where you are planning to move, your agency might even be able to handle the sale of your home and the purchase of a new one. If you have any questions or concerns, you should always address them with your agent before making any big decisions.

            Your lender will also be able to inform you if you happen to qualify for a bridge loan that could make things easier, so make sure you give your broker a call as well. Some bridge loans will seem appealing but many of them could put you in a tight bind. This is because most bridge loans carry high upfront payments and higher interest rates.

            Whatever you do, don't take out one of these loans before consulting with your agent. If anything, he or she will at least be able to provide moral support as you make some of the hardest financial decisions in the role of both the seller and the buyer.

What is escrow /impound account?

Have you ever heard of an escrow impound account? If not, you may want to make yourself aware of what it is before selling or buying a home. This is because it could be quite beneficial in some situations. Here's an in-depth look at what an escrow impound account is and in what types of situations it may be helpful.

 What is an escrow impound account?

An escrow impound account is a type of account that establishes terms which allow you to pay property taxes and/or homeowners insurance by automatically collecting a percentage of the annual total along with your monthly mortgage payments.

 Are there any applicable fees?

Setting up an escrow impound account is conveniently free and easy. You can choose to have just property taxes collected each month, just your insurance payments collected or a combination of both collected. If you are being charged to set up an escrow impound account, you are better off looking for a new lender or agency to work with. There should be no reason to charge you for incorporating this type of account when going through escrow. In fact, most agents encourage their clients to set them up because they're free and they're essential when it comes to making you “attractive” to lenders. If you opt to forego the setting up of an escrow impound account, be aware that you will be responsible for your entire tax or insurance bill all at once.

 How is the amount per month calculated?

Calculating how much will be added to your mortgage bill each month with the use of an escrow impound account is fairly simple. All you have to do is divide the annual cost of property taxes and/or insurance by 12 (months of the year). The 1/12th percentage will be what is applied to your monthly mortgage payments.

 What is an escrow impound deposit?

Generally, all escrow impound accounts have to be opened with a deposit that will cover about 2-6 months of the tax/insurance totals. Opening an account with a healthy deposit protects you in case you there were ever a situation to occur that involved you not having the funds to cover the payment. This also provides you with a little cushion since taxes and insurance rates can sometimes fluctuate throughout the year.

            Escrow impound accounts are popular among homeowners because they let them have peace of mind when it comes to keeping up with the expenses needed to maintain good standing with their mortgage lenders. The terms for the account are usually discussed prior to you applying for a loan, and lenders are more inclined to approve loans for those who have already agreed to setting aside taxes and insurance payments month to month. This is because their risks are lowered when they are assured you will be covered by an escrow impound account. It's also helpful for homeowners because they won't have to pay up for an annual tax payment or insurance payment upfront. An escrow impound account instead allows homeowners to distribute the costs throughout the year to make them more bearable.

Seller rent back after a close of escrow

            If you are buying or selling a piece of property in a hot market, such as Seattle, you may want to consider including the option of “seller rent back” in the details of the deal. Not exactly sure what “seller rent back” is and whether or not it could benefit you? Here is a look at everything you need to know about this real estate option, including what it could do for your buying or selling situation.

What is “seller rent back”?

To put it simply, “seller rent back” allows the seller to live in a home even though he or she no longer owns it. Basically, you end up paying rent to the person or group that has purchased the property once escrow has closed. You pretty much become the tenant and they become the landlord. Although, it's really important to point out that it isn't as simple as it may seem. Both parties need to agree upon specific lease terms, such as security deposits, the amount of rent to be collected each month, the due dates for payments, what services will be covered by the agreement and who all is allowed to live on the property.

 What are “rent back” options?

If you are looking to get involved in simple seller rent back after escrow, you will most likely need to need to fill out a short form known as a PRDS (seller occupancy after sale). There are some situations where the seller turned tenant will only need to stay in the home for a brief period of time. If planning to live on the property for 30 days or less, you'll need to fill out a CAR form, also known as a “possession addendum”. This form is a bit more lengthy than a PRDS, and you will definitely want to have your agent help you accurately fill out all of the details.

What warnings should I look for?

There are a few different details you should pay close attention to before making any serious commitment. For example, the contract could reserve the right for the new owner to check in on you at anytime, it might delegate all maintenance to the tenant and so on. Just make sure you read over every form carefully to ensure you know what you're getting into. If you still have any questions or concerns after looking over the contract, it's best to consult with your agent. He or she has likely handled a similar situation in the past, which means you'll be learning firsthand from an expert.

             When it comes down to it, “seller rent back” could be a good option if you would like to relieve yourself of mortgage burden but still live in your home. If you are selling your property in a highly competitive market, you may want to consider exploring your rent back options. A real estate lawyer or tax attorney could also be really helpful when it comes to negotiating seller rent back after close of escrow.

Waiving contingencies

          If you happen to be buying a home in a hot real estate market, such as Seattle, WA, you might feel a little pressure to cave when it comes to winning over a seller that is looking to get the best deal for his or her bottom line. This might lead you to think about compromising some of your contingencies. Not sure what they are? Typically, buyers establish contingencies that let the seller know a the deal could be called off at anytime if everything doesn't check out to be as advertised or as agreed upon. This of course providers a buyer with more power during the sale, allowing them to make deals and haggle bargains that benefit them.

            However, all bets seem to be off when dealing with a seller in a highly competitive market. Waiving contingencies may appear to disadvantage a buyer, but this isn't necessarily true. As a matter of fact, some buyers in hot markets are waiving their contingencies to get an advantage during the home buying process.

            On the other hand, there are some contingencies that should be carefully considered before making any big moves. Waiving these contingencies could put you at risks you never thought of. Since contingencies vary depending on a situation and the market, here is a look at some of the ones that home buyers should put at the very bottom of their waiver list.

Earlier Move-In Dates

If you have ever had part in a real estate deal, you may already know that things can take time. This is why many home buyers make a request to move their belongings into the home if for some reason the closing is delayed. While this contingency is convenient for the buyer, most sellers feel inconvenienced by it because there are too many unknowns in these type of situations. Moving in early and then having to work out the final kinks could also put the buyer in a bind because the seller knows how much you want to quickly close on the home. After all, you already moved in!

Homeowners Associations

Some buyers are wary of what lies in the details of contracts with homeowners associations, which is why they ask for a homeowners association contingency. Basically, this covers you in case you realize that the rules don't fit your lifestyle. It's just best to do your homework before making any deals to ensure you are looking in a neighborhood that will allow you and your family to maintain your lifestyle. If you have no specific concerns and no problem complying with the rules, waiving this contingency might be a good idea.


A financing contingency protects the buyer in the instance his or her financing falls through. For obvious reasons, waiving this contingency could lead to lots of problems. First of all, you'll likely look your earnest money. Second, you might be forced to pay all kinds of fees if you are not protected. Nonetheless, if a buyer is financially stable or if he or she has a padded savings account, waiving this contingency might be appealing to him or her.


Chances are your lender will require an appraisal before letting you proceed with the deal, but in some cases, you might be able to waive this contingency. Just keep in mind that waiving this contingency is not necessarily recommended because appraisals are what provide you with an assessment of the home's value. If you don't have an appraisal performed, you might end up overpaying or settling for a deal that will leave you in high water.

Home Inspections

There are plenty of reasons why you would want to have the property inspected before agreeing to buy, which is why the majority of buyers insist of including a home inspection contingency when negotiating a real estate deal. You can opt to waive this contingency but do so at your own peril. You'll be waiving the right to have the home inspected, so who knows what little (or big) secrets you'll discover after moving in or living in the home for a couple of years. Do yourself a a favor and make sure you have a professional home inspector take a look at the property before you commit. If a seller is persistent that the contingency should be waived, this should be a huge warning sign.

 Title Inspections

If asked to waive your contingency regarding a title inspection, your instincts should kick in and tell you to get out of the deal while you can. There are a range of marks that can be made against a title and you won't know about them unless you have them investigated by a title inspector. A title search will let you know who currently owns the home, who has owned the home in the past and if there are any liens on the property that you should be aware of. At all costs, this contingency should never be waived. Why? Well, because you could wind up owning a home with a title that is riddled with liens. These liens will then become your responsibility, leaving you in a financial bind you never saw coming.

             Waiving contingencies in certain markets could potentially give buyers an edge, but there are just some that should never be touched. If you are planning to purchase a piece of property in a booming market, such as Seattle, it's recommended you discuss contingencies with your realtor before beginning the search for a new home. He or she should be able to facilitate you with loads of helpful information regarding contingencies and the level of risk associated with the waiving of each one. Once you know how waiving contingencies might affect you as a buyer, you will be more inclined to either stand your ground on important matters or strike while the market is hot in order to get an amazing deal. As always, it's best to consult with a professional that deals with these type of situations on a daily basis.


What is home warranty program?

            Beginning the journey of home ownership can be incredibly exciting, but it can also be quite daunting for inexperienced home buyers. This is because there are all kinds of things that could go wrong. If something suddenly breaks down or stops working in the home, the majority of first-time homeowners will likely not even know the first steps they should take to make the necessary repairs. One of the best ways to ensure that you're protected after buying a home is to obtain home warranty coverage. A home warranty plan is especially recommended if you're a first-time home buyer with little to no experienced maintaining a home. Are you a new homeowner or seller thinking about protecting yourself with a home warranty plan? Here's a bit of information about home warranties to give you an idea of why it's so important.

Who Pays for the Home Warranty

Who will be paying for the home warranty really depends on the situation and the local customs. In most instances, the seller is the one to pay for the home protection plan and for home warranty coverage to ensure he or she is covered in case anything goes wrong. It's common for the seller to pay for the home warranty plan because it provides them the most benefit by allowing them to not worry about the home buyer calling on them if something happens to break or malfunction. Instead, the issues will be handled by the home warranty company. Many real estate agents will even give buyers a home warranty at closing as a common courtesy.

How Much Does a Home Warranty Cost?

Generally, a home warranty is fairly inexpensive and affordable for most home buyers. In most states, a basic home warranty plan costs around $200-$400 depending on the type of coverage and the value of the home's electrical or mechanical features. Many home warranty companies sometimes offer home buyers with special discounts and even occasionally run promotions that could lessen the cost of coverage. A home warranty policy is paid upfront once year in advance and covers the homeowner for that entire period. At the end of the year, the warranty expires and the homeowner can then choose to renew the policy or not.

Types of Home Warranty Coverage

The type of home warranty you need is based on a number of factors such as what you want to cover and the age of the home. Since warranty plans vary, you may want to contact your real estate agent in order to find out what would be the best plan for you. Be sure that you pay attention to what the home warranty covers as some will pay for certain repairs, while other do not.

How a Home Warranty Works

Home warranty plans are all different because they're usually constructed around the needs of the home buyer and the specific of the home they purchased. While they may differ, home warranty plans generally follow the same protocol. Below are the steps that are taken when a home buyer need his or her home warranty plan to cover a break or system failure.

  • Once the homeowner realizes that an entire system or a particular appliance is broken or no longer working, he or she calls the warranty company.
  • The representative or agent from the home warranty company notifies a local provider with whom they have a predetermined business arrangement.
  • The provider then calls the homeowner in order to schedule an appointment for a visit to determine a plan of action.
  • After reviewing the break or malfunction, the provider then fixes the problem if possible. If for any reason the provider is not able to repair the system to solve the issue and depending on the kind of coverage the homeowner has, the home warranty company will pay to replace the appliance or system.

What is a Trade Call Fee?

Whenever a service contractor visits a home in order to diagnose a problem, the homeowner is required to pay a “trade call fee”. This small fee covers the visit and the amount is determined in the initial contract.

What Does a Home Warranty Plan Cover?

Below are a few of the aspects of a home that are generally covered by most home warranty plans.

  • Dishwashers
  • Air conditioning
  • Doorbell systems
  • Heater or furnace
  • Ductwork
  • Water heater
  • Garbage disposal
  • Indoor plumbing
  • Electrical systems
  • Oven
  • Telephone wiring
  • ceiling fans

What Is Not Covered by a Home Warranty Plan?

Here are just a few of the things that are typically not covered by most home warranty plans:

  • Faucet repairs
  • Appliances such as refrigerators, garage door openers or washers and dryers
  • Spas or pools (unless added)
  • Permit Fees
  • Outdoor items such as sprinkler systems
  • Haul Aways

Keep in mind that things such as washers and dryers, spas or pools and refrigerators can all be covered by a home warranty if initially added to the plan.

What Can Cause a Denial of Payment?

A home warranty company can actually refuse to pay for the repair or replacement. This usually happens if the homeowner has not been properly maintaining the home, if he or she has violated any codes, if equipment was improperly installed or if there appears to be unusual wear and tear on the property. If you disagree with the diagnosis or denial of payment, you may want to call your real estate agent as he or she can talk to the home warranty company to see what can be worked out.

As you can clearly see, a home warranty plan is always recommended for new homeowners for a number of valid reasons. Since home warranty coverage can vary according to the state you live in, it's highly recommended you discuss your options with your real estate agent before you commit to any warranty plans. He or she will be able to answer any questions you have and make sure you get the proper coverage in order to provide you peace of mind as you move into your new home.

Mortgage Insurance – What is PMI and how does it work?

If you've ever had a mortgage loan, you may have been a little surprised to find out that the lending company requires you to have mortgage insurance. Not very many first-time home buyers are aware that most big mortgage companies and the government require borrowers to obtain a mortgage insurance policy to ensure that they will get paid in full if you ever happen to default. You'd be pleased to know that not only does mortgage insurance benefit the mortgage lender, it's also rather beneficial for borrowers. This is because having mortgage insurance allows borrowers to purchase a home before they have accumulated the full 20% down payment. Are you planning to purchase a home soon and currently considering getting yourself covered with mortgage insurance? Perhaps your lender has already notified you that you will indeed have to pay for mortgage insurance. Whatever the situation might be, here's everything you need to know about mortgage insurance and everything that comes along with it to make you a more knowledgeable borrower.

Types of Mortgage Insurance

Generally, there are two basic kinds of mortgage insurance and the type that you will need depends on the mortgage loan you will be getting. These two different types are mortgage insurance purchased from the government and mortgage insurance that covers loans from the private sector. The mortgage insurance purchased from the government is understandably designed for borrowers with an FHA or a VA loan. Mortgage insurance for conventional loans from a private mortgage company is usually referred to as PMI (Private Mortgage Insurance).

Who Needs Mortgage Insurance?

When it comes to private loans, most lenders will require borrowers to carry mortgage insurance if their down payment is less than 20% of the home's value. Normally borrowers are required by lenders to be covered with mortgage insurance until their loan-to-value ratio (LTV) is at least 80%. The loan-to-value ratio is most simply put as the amount of money borrowed divided by the actual value of the home. By regularly paying your mortgage payments, your LTV will eventually start to decrease. As for government loans, mortgage insurance is typically required regardless of the LTV.

How Much Does Mortgage Insurance Cost?

Mortgage insurance rates can vary depending on a number of factors. For example, the lower down payment you provide or a low credit score will subsequently mean you will be paying a higher mortgage insurance premium. For most home buyers, monthly mortgage insurance premiums generally range from around $30-$70 for every $100,000 borrowed. Insurance rates are a little different when it comes to FHA or VA loans backed by the government. For FHA loans, there is an up-front MIP (Mortgage Insurance Premium) and an annual premium which is collected from the borrower on a monthly basis. As for VA loans, borrowers are required to pay an up-front funding fee but do not have to pay an annual or monthly premium. If you have any questions about mortgage insurance premiums or current interest rates, you may want to contact your lender to get a better idea about all of the specific details.

Paying for Mortgage Insurance

Most borrowers pay both their mortgage insurance premiums long with their monthly mortgage payment. In most circumstances, you can just send in one single payment to the lender that covers both the insurance and the loan payment. Some lenders may also allow borrowers to pay their PMI in one lump sum at closing or incorporate the financing of the premium into their loan payment.

Why Do I Need Mortgage Insurance?

Mortgage insurance is usually required by lenders because it protects them in case you are no longer able to make your mortgage payments. If you ever do happen to default on your mortgage loan, the lender will be paid in full by the mortgage insurance.

Ways to Avoid Having to Get Mortgage Insurance

When it comes to conventional private mortgage loans, there are a couple of ways to avoid having to pay monthly mortgage insurance premiums. One of the best ways to avoid paying for mortgage insurance is by providing more than a 20% down payment. This is because you will have more invested in the property which makes the lender more comfortable with your ability and willingness to repay the loan.

When Do I No Longer Need Mortgage Insurance

Once you build up a substantial amount of equity in your home, you can eventually request to cancel your mortgage insurance. Under most circumstances, the lender will not automatically cancel the PMI until you've attained at least 22% equity based on the initial appraisal value. As a matter of fact, lenders are required by the federal Homeowners Protection Act to cancel mortgage insurance once the amount of money the borrower has paid back equals 22% of the home's purchase price. If you keep track of your payments and realize that you have reached at least 20% equity, you can also contact the lending company yourself to request your PMI to be canceled. Once it is canceled, you can then invest the extra money into building even more equity in your home to one day make a rewarding profit when it's time to sell. On the other hand, FHA-insured loans require borrowers to pay mortgage insurance premiums for the full life of the loan. The mortgage insurance premiums for FHA loans can never be canceled and if necessary, borrowers will have to refinance the loan.

Hopefully you now have a better understanding of what PMI is, why it's necessary and what it covers. While it may seem a little expensive, there really is no question that getting covered with mortgage insurance is a good idea even if you're not necessarily required to have it. Although, if you want to avoid having to pay monthly mortgage insurance premiums, you should probably create a savings account to save money that will add up to more than a 20% down payment. If you happen to have any further questions regarding mortgage insurance as it pertains to either private or government loans, you may want to contact your lender for information applicable for you and your loan type.

What should a pre-approval letter contain?

Once you find out just how much you can spend on a home, you'll then know which properties you can start looking at. In fact, real estate agents for the most part won't even begin showing you homes until you have submitted a pre-approval statement. There are some lenders who may provide you with a pre-qualification statement before analyzing your credit report, but it's actually recommended you obtain a pre-approval letter instead because they're much more reliable. If you will soon be applying for a mortgage loan in order to buy a home, you'll want to be aware of what all should be included in your pre-approval letter. To become a better informed home buyer, take a look at all of the details your pre-approval letter should contain.

Pre-approved Loan Amount – Of course every pre-approval letter will let you know the loan amount that you could possibly receive from the lender.

Dates – Your pre-approval letter should have the date it was given to you and the date that it expires. If the document is older than 30 days or so, the lender might find it necessary to draw up an entirely new letter.

Terms – Most pre-approval letters will clearly state that the home must have a clear title which can be easily transferred and that it must be appraised for at least the selling price.

Loan Conditions – Your pre-approval letter will also contain information regarding the type of loan program you have been approved for. This will lay out any conditions you need to meet in order to qualify for the loan such as your most recent bank statements, information from your employer, a certain down payment amount or verification of your rental history.

Interest Rate – The letter should also let you know the current interest rate on mortgage loans. It's important to remember that while this interest rate can give you a good estimate, it's likely a floating rate. This means that the rate is subject to change at anytime without any notice.

Payment Information – Pre-approval letters also inform buyers of what the payment process will be like if they are approved for the specified loan amount.

Contact Details – Every pre-approval letter should also feature all of the contact information for your mortgage lender in case you have any questions or concerns regarding lending.

Keep in mind that in some states such as Texas, a pre-qualification or pre-approval letter is required and must adhere to the laws and regulations set by the state. If you live in one of these states, make sure your lender provides you with the right documentation to avoid any confusion or issues that could delay your purchase. When picking up your pre-approval letter, you may also want to ask your lender for a copy of the “Good Faith Estimate” (GFE) in order to get a better idea of what the closing costs might be. All of this information put together can best prepare you to begin the process of finding the perfect home to call your own.

PreApproval vs PreQualification

If you've ever applied for a mortgage, you most likely noticed that there are a variety of specific terms associated with the home buying process. Many of these terms related to the real estate industry are fairly similar, which can easily confuse inexperienced home buyers. For instance, a couple of these particularly confusing terms are pre-approval and pre-qualification. The majority of first-time home buyers think that these two real estate terms have the same meaning, but that's actually not true at all. While both of these terms deal with the amount of lending you may receive from a bank or mortgage company, they are quite a bit different from one another. Take a look at some of the differences between pre-approval and pre-qualification in terms of mortgage loans and real estate transactions.

Pre-Approval – A pre-approval is usually the most dependable and accurate estimate of how much you can afford to spend on a home. This is because a pre-approval is mainly determined according to the information you provide the lender and the results of your credit report. Once the lender looks into your credit history, they're then able to decide what would be the appropriate amount to lend based on data such as your overall credit score and your debt-to-income ratio. Being pre-approved for a certain amount is recommended because then you won't be looking at properties that may be out of your price range, which is the best way to avoid disappointment down the road.

Pre-Qualification – On the other hand, a pre-qualification is a bit more basic than a pre-approval because it is not at all based on your credit history. This means that the lender has no other choice than to rely solely on the information you provide them. If the credit score and amount of debt you provide them with is not accurate, you will most likely get pre-qualified for more than you can actually afford. While some people prefer to go with a pre-qualification when they begin house hunting because it doesn't require them to submit their social security number, it could cause some serious problems. For example, if you get pre-qualified for a loan amount and then find a home that you believe will fit your budget only to find out that you can't afford it based on your credit and debt load. You'll probably be terribly disappointed and will have to start the house hunting process all over again.

Once you begin taking the steps to purchase a new home, you'll soon discover just how stressful it can actually be. Having an idea of the differences between a pre-qualification and a pre-approval can better prepare you to take on the task of find your perfect home. Most home buyers are really best off getting pre-approved instead of pre-qualified so they can be confident when shopping for a home in order to save time and avoid disappointment. As a matter of fact, some mortgage lenders only use pre-approvals and don't even provide pre-qualifications. Keep this bit of information in mind as you begin your search for a place you can officially call your own.

Explaining the Loan Process Mortgage Underwriting

There's no question that the majority of home buyers need to take out a mortgage loan in order to purchase property. Of course buying a home can be a rather exciting experience, but it can also be quite a stressful one because there are many steps involved in the loan process. The very last step absolutely necessary before you are able to finalize your mortgage loan and purchase your new home is known as underwriting. Not sure what mortgage underwriting is and what all it entails? Here are all of the things you need to know about underwriting home loans in order to help you become a well informed borrower.

What is Mortgage Underwriting?

Underwriting is one of the most important factors when it comes to obtaining a mortgage loan. This is because underwriting is the final step of your mortgage application and could very well impact your ability to go through with the transaction. During the underwriting process, a trained professional who is employed by the lending company known as the underwriter will review all of the application information in order to determine if the loan should be approved or not.

What Does A Mortgage Underwriter Do?

The underwriter plays a major role in the lender's decision to either approve or deny your application for a mortgage loan. To determine whether you're a good loan candidate or not, these are just a few of the many things a mortgage underwriter will look at:

  • Ability to Repay the Loan – The lender will want to know your ability and your willingness to repay the loan, which is why the underwriter will review your credit rating, your financial background and your history with previous lending.
  • The Home You Wish to Purchase – The underwriter will also look at the home you want to purchase with the loan and if the price is fitting to the property. In order to be sure the home is appropriately priced, the underwriter will usually send out an appraiser to provide them with the market value of the home.

How Long Does the Underwriting Take?

The length of the underwriting process really depends on how complicated the loan is as well as the availability and the experience of the underwriter. An underwriter who is not so busy and has a great deal of experience in the industry can usually complete the underwriting in just a few days. If the underwriter has quite a few other loans to review before yours or if your application is a little complicated due to special circumstances, you could possibly be waiting up to a few weeks for a final answer.

Underwriting can often be the most stressful step in applying for a mortgage loan, but it doesn't have to be. The best way to avoid delays and speed up the process is to ensure that you are completely forthcoming with your lender about your financial background and credit history. If there are any surprises that arise during the underwriters investigation, it could take a whole lot longer to proceed with the purchase of your home.

Why do I need a Buyers Consultation Anyways!

Many first-time home buyers get excited and want to rush the buying process in order to get into their new home right away, but there actually are a few really important steps that should be followed. Once you've decided it's time to own your own home, the first thing you'll want to do is schedule a home buyer's consultation with a reputable real estate agent in your area. This is because a home buyer's consultation can help you determine your wants, needs and expectations as a first-time home buyer in addition to giving your agent an idea of what it is you're looking for. If you're a first-time home buyer and don't happen to think you need a home buyer's consultation, you may want to think again. Here are couple of the reasons why you definitely need to consult with a professional real estate agent before beginning the process of buying your first home.

Obtain Helpful Information – The process of buying your first home can get a little confusing at times if you're not familiar with the real estate industry, which is why many first-time home buyers are typically full of questions. If you have any questions regarding the home buying process or local real estate laws and regulations, you can usually get them answered during your home buyer's consultation. Your agent deals with these issues on a daily basis, so he or she will be the best one to provide you with helpful information before you begin your search for a new home.

Narrow Your Search – Many first-time home buyers are easily overwhelmed by all of the paperwork, permits, community ratings, fees and budgets. One of the worst things first-time home buyers can do is blindly start looking homes that are way out of their budget or that don't fit their needs. After attending your home buyer's consultation, you'll have a better idea where to start searching for your new home. This is because your agent can best help you determine which areas you should be looking in by providing you with helpful information about neighborhoods and price ranges. Once you have established your wish list as well as your list of must-haves, your agent can then begin sending you lists of properties you may be interested in.

Affordable or Complimentary – Not many first-time home buyers are aware that home buyer's consultations are usually a complimentary service provided by real estate agents. While most home buyer's consultations are free, some agents may charge a nominal consultation fee. If there is an applicable fee, it's likely a rather small price to pay for such assistance.

A home buyer's consultation is an extremely important step to purchasing a home. If you are a first-time home buyer, the very first thing on your to-do list should be to schedule your consultation. It's best to call your local real estate agent to set up an appointment for your home buyer's consultation or contact me if you would like any further information.

All information provided is deemed reliable but is not guaranteed and should be independently verified.