STEP 3 – IT’S ALL DOWNHILL FROM HERE!
October 23rd, 2008 categories: Buyer Strategies, Mortgage & Finance
[NOTE: Rob Martinson continues his series on getting the home mortgage process right for home buyers in Northern Virginia. His previous installments are in our Mortgage & Finance archive.]
I likened this step to a rollercoaster in my synopsis. By this point you will feel like things have been dragging along without too much happening – sort of like that long slow ascent up the first hill. But now it is time for the ride. Your loan officer should already have your loan on the system and approved through underwriting. All you need to do at this point is hand him a contract of sale to push the car over the hill.
Your loan officer needs to convert your pre-approval to a full approval. In order to do that, he will take your contract and order a number of things. The first thing he will order is an appraisal. The purpose of the appraisal is to determine a few things. Most importantly, your lender will want to ensure that the price you are paying (and the subsequent amount they loan you) for the property match the industry prices for that type of construction.
The appraiser’s task is to find similar properties to the one you are buying and through a comparative approach, he will state his opinion as to the value of the home. The appraiser’s job is also to make sure that the house is sound, livable, and does not pose any threat to any future occupants. Once the appraiser has indicated that the surrounding values support the sales price and that the house is deemed livable and safe, you will want to make sure your Realtor® lifts the appraisal contingency to avoid having your contract voided.
The next thing your loan officer will order will be a title search through a Title Company. The title company is charged mainly with ensuring that your property is free and clear of any liens, judgments, or any other potential expensive pitfalls as well as to make sure that the people selling you the house are the only people who own the house. You certainly don’t want Uncle Bob coming back from a 5 year stint in the Alaskan wilderness wondering why and how his niece sold you his house. That could get awkward quickly! Assuming the title comes back clean, you know you are safe. (More on knowing the basics of the Pre-Closing Process, here)
Last on your list will be to secure an insurance policy for the dwelling. Be sure to shop around. Other than great customer service, the only thing you are really looking for is the lowest price. Do not be fooled by how cute the duck or gecko is. Everybody is selling you the same product and Bank of America, for one, does not care who you use. We just need a copy of the policy, so this is a good place to save a little dough.
Once these three things are in and cleared, your ride is almost complete. Just a little clean up on aisle five and you’re going to have yourself a loan. Check back in to see the next post, Step 4: A Walk in the Park.
[This post by Robert Martinson. You can contact Robert at Robert.a.martinson@bankofamerica.com]
