Resource Guide and News
Real Estate Buying Process
Let's assume that you have found the property on which you wish to place an offer and that you have spoken to a bank or mortgage broker (if financing) to determine a comfortable financing price level.
- Determine how much you can afford. Speak to a bank's loan officer or mortgage broker for assistance.
- Get pre-qualified or pre-approved for a mortgage. You can either do this in a few minutes online or your bank's loan officer or mortgage broker can help you. A pre-qualification is not as beneficial as a pre-approval where you have to go through a more rigorous process which includes verification of your credit, income, assets and liabilities. It is highly recommended that you get pre-approved before you start looking for a house.
BENEFITS OF PRE-APPROVAL:
- Find out the maximum house you can buy, so you don't waste time looking for properties you cannot afford.
- Puts you in a stronger position when you are negotiating with the seller because the seller knows that your loan is already approved.
- Speeds up the closing process since your loan is already approved.
- Determine in which neighborhood you would like to purchase your property. Your Dynamax agent can assist you in finding the right neighborhood for you.
- Find and visit as many properties in your preferred neighborhood(s) as you can until you find several properties that you would like to submit offers for. Your Dynamax agent can assist you in finding the properties that match your specific needs and preferences (pricing, location to transportation, neighborhood cultural attractions, convenience to shopping, etc.,.).
- Submit your offer. Your Dynamax agent will submit a bid or offer on your behalf to the seller's agent. A seller may "counter" your offer. This will begin a negotiation process that will eventually lead to a "meeting of the minds," at which point price, terms, and closing date have been agreed upon.
- If an offer is accepted, contact a real estate attorney. Your Dynamax agent can assist you in finding an experienced attorney to represent you. The attorney will prepare/review the contract of sale and will examine the financial condition of the building in which you wish to purchase an apartment.
- After your lawyer concludes that the financial condition is satisfactory, and that the contract of sale is also acceptable, your attorney will allow you to sign the contract. At that time you will usually be required to present a deposit of 10% of the purchase price. The contract plus the deposit will then be forwarded to the seller for signature. This money will be held in the seller's attorney's escrow account until closing. It is important to note that until all parties have signed the contract, and it has been delivered, the seller can still entertain and accept other offers.
- If financing, you should move forward with your loan application. You should shop around as loan programs and rates vary from lender to lender. If you have not already done so, your Dynamax agent can assist you in finding a mortgage broker or bank that can help you obtain financing.
CHOOSING A LOAN THAT SUITS YOUR NEEDS:
- Think about how long you plan to keep the loan. If you plan to keep the property for a long time, you may want to look at fixed loans. On the other hand, if you plan to sell the property in a few years, you may want to consider an adjustable or balloon loan.
- Understand the relationship between rates and points. Points are considered to be prepaid interest and are tax deductible. Each point is equal to one percent of the loan. For example, 1 point on a $150,000 loan is $1,500. The more points you pay, the lower the interest rate you will get.
- Compare different programs. Shopping for a loan can be difficult. With so many programs to choose from, each of which has different rates, points and fees, it's hard to figure out which program is best for you. That's where an experienced loan officer can help you make a decision that's best for you.
OBTAINING LOAN APPROVAL:
Once your loan application is received by the bank, the loan approval process begins immediately. The following must usually be submitted and verified in conjunction with your loan application.
- Credit history
- Employment history
- Financial assets, including your bank accounts, stocks, mutual fund and retirement accounts
- Property value
- Based on your specific situation, additional documents or verifications may be required.
To improve your chances of getting a loan approval:
- Fill out the loan application completely.
- Respond promptly to any requests for additional documents. This is especially critical if your rate is locked or if you plan to close by a certain date.
- Do not make any major purchases, such as a car, furniture or another property until your loan is closed. Anything that causes your debts to increase might have an adverse affect on your current application.
- Do not move money into your bank accounts unless it can be traced. If you are receiving money from friends, family or other relatives, please advise your loan officer or mortgage broker promptly.
- Your attorney and bank will ensure that all necessary documentation is prepared and that all parties are scheduled to appear for the closing.
- Bring a cashiers check for your down payment and closing costs if required. Personal checks are normally not accepted.
- Review the final loan documents. Make sure that the interest rate and loan terms are what you were promised. Also, verify that the name and address on the loan documents are accurate.
- Sign the loan documents.
- Get your keys and enjoy your new property!