I get a lot of questions about what the first steps are to buy a house. My suggestion to buyers is always to talk to a lender first. A lender, or loan officer, is the person who can tell you what budget you should be looking in and they will be the ones who can provide you with a pre-approval and pre-qualification letter – these are what we send with your offer for a home to prove you can buy it!
To answer some of the top questions I get from buyers I reached out to my dear friend M. Maddy Armstrong, an expert loan officer with NFM Lending.
What should I bring to my first meeting with my lender
Most importantly- I’ll want to know what you’re looking for with the new mortgage- Area of town, Desired payment, Down payment, loan term etc. Often times clients want to see what the maximum it is they qualify for as well as what their desired monthly payment translates to in purchase price. I’ll also collect general information from the client to pull credit, obtain 2 year employment history as well as residential history. This can be done in person or over the phone!
How quickly can I get a pre-approval letter
As soon as the client gets me the above information, I can issue a prequalification letter same day (sometimes within the next 1-2 hours)- maximum turn time would be 24 hours if the file has some complexities. Now, a prequalification letter is a letter based on the information you told me with a credit pull. In order for me to issue a preapproval letter, I’ll want to verify that information with supporting documents. I’ll run automated Underwriting findings and collect the following from my clients: Tax returns, paystubs, W-2s and bank statements
What is the standard closing time on a house
With a typical FHA, conventional or VA loan- 30 days is standard. Check with your lender to see if they can pull off a closing in <30 days (some seasons are busier than others.) If you’re doing a USDA or VHDA (First Time Buyer Program) we ask that you write a 40-60 day contract to allow enough time for the additional underwriting turn times.
What happens after I find a house
GREAT! You want to immediately send the ratified contract to your lender so that they can get the paperwork set up. You’ll set up a time to come into the office or conference in for “official loan application.” Face-to-face appointments are preferred, you are able to cover so much more when you meet in person and it’s nice to know the person that you are trusting to help you with the financing process. We will exchange any additional paperwork needed at that point, answer any and all questions about the numbers and the loan process, and sign your required loan disclosures. From there- we submit the loan into processing for it to then be shipped off to Underwriting for a Conditional Loan Approval.
Do I need to pay anything upfront to get pre-approved
Absolutely not- the preapproval process is more of a free consultative service that lenders offer. This gives lenders the opportunity to sit down with the client, understand their needs and concerns, and help educate them on the loan options they have available to them. I like to cover how the loan process works, what’s expected as far as costs, the numbers, and paperwork so when they leave the preapproval appointment CONFIDENT and READY to buy!
What costs can I expect to incur on behalf of the bank
The only fee my company charges is a $995 Origination fee. This is a one-time charge that gets paid at closing as a part of your closing costs. There are additional closing costs that you will pay at closing (attorney’s fees, taxes, appraisal fees, etc) but the only fee a lender would be charging is their origination fee. There are 2 items that are paid PRIOR to closing which is the inspection fee, if you elect to get a home inspection, and the appraisal fee (ranges $400-500). These are collected prior to closing by the appropriate parties BECAUSE- in the event that the loan does not close, the inspector and appraiser still need to be paid for their services.
If you have more questions you can reach out to Maddy or to a loan officer from your local bank.