Funding Your Home Purchase

Most people will need a loan to finance the purchase of a home, and it can be a long, confusing, infuriating and complicated process. Fun, right? But it doesn't have to be if you know what to expect when. Keep reading...

before viewing homes or writing Offers

1. Find a lender.

  • You can find and work with your own lender, or we're happy to make recommendations for lenders we've worked with that can get the job done quickly and efficiently. 

*TIP* - You are not required to use any specific lender. Shop around to see who you click with and who is offering the best rate and terms (although they should all be relatively similar in these aspects). Remember that they work for you! Don't be afraid to ask questions, or even ask for a better deal. They are working to get your business.

2. Financial pre-qualification

A 'pre-qual' letter from the lender is required to submit a purchase offer on a home. The pre-qual is something you should get prior to looking at homes, not only to know how much you can afford, but to be prepared in case you immediately see a home you'd like to offer on. To get pre-qualified, you'll need:

  • Application and interview with the lender
  • Lender will require pertinent documentation, including verification of employment and proof of funds for downpayment 
  • With your approval, lender will run your credit 

*TIP* - As far in advance prior to making an offer consolidate downpayment funds into one account. If all funds are in one account for at least two bank statement cycles you'll significantly lessen the amount of paperwork required by the lender and headache for yourself. This includes obtaining downpayment funds from family. Get that cash now, not once you're in escrow. Again, you'll save yourself and your lender A LOT of headaches and paperwork.

Post-Accepted Offer

1. Underwriting

  • The lender will need a significant amount of financial information from you in a compact time period, including (but not limited to):
    • Last two-month's bank statements from any and all accounts where down payment funds will be originating.
    • Additional account statements showing 'reserve' funds. This is savings outside of the downpayment and closing costs, equivalent to the PITI (Principal, Interest, Taxes and Insurance) on your new home. The required reserve can be anything from none to 12 months of PITI reserves depending on your type of loan. Ask your lender early on if you'll need to show reserve funds based on your loan.
      • These funds can be in the form of 401(k) or other retirement accounts, in addition to other type investment accounts.
  •  Once complete, your entire loan package is submitted to an underwriter for approval. In all likelihood they'll require additional documentation after the file is submitted to underwriting. When you think you're done sending paperwork, they'll ask for you something else.

2. Loan approval

  • Parties are notified of approval (Yay!)
  • Loan documents are completed and sent to title

3. Title company

  • Title exam, insurance and title survey conducted
  • Borrowers come in for final signatures

4. Funding

  • Lender reviews the loan package
  • Downpayment and closing cost funds are transferred by you to the escrow company
  • Get your keys and move in

**All information provided here is for reference only and will not be relevant for every loan situation** 

Your new home awaits.