The Home Loan Process



I enjoy working a with wide variety of buyers and sellers, but one of my favorite types of clients are first time home buyers. To ensure the satisfaction of your client, it is very important to educate them and guide them through each step of the process. After a buyer gets a pre-approval with a lender, searches for and tours prospective homes and finds the right one, it is time for their Realtor to write a contract offer! Upon acceptance of the contract, it is important for the client to understand what is next. The buying process can be very lengthy and sometimes confusing. In order to help your clients understand their responsibilities during the process, I have put together some information explaining the process for buyers.

Loan Application – Typically the buyer is given somewhere between 2 and 10 days to fill out their loan application. This application is separate from the application they filled out for a pre-qualification letter, and includes the submission of their entire loan package into underwriting. This also gives the seller an indication you intend to proceed with purchasing the home. This is an important timeline to be aware of, as it is a term outlined in the purchase contact.

Inspection period – The inspection period can range anywhere from 2-14 days. During this time the buyer has the right to conduct inspections on the property. The inspector(s) determine the overall health of the property, by checking things like roof, electrical systems, furnace, HVAC, water heater, appliances, and signs of current or previous pest damage. The inspector(s) will submit a report to the buyer’s agent and/or the buyer directly for their review.

Post inspection agreement- Upon receiving the inspection report, the buyer and their agent will determine a list of repair requests to give to the sellers. It is important to stick to big ticket items that affect overall safety and habitability of the home. These repair items are negotiable and the seller does have right to counter back to the buyer. If items are not fixed before closing, sometimes the buyer and seller will agree to exchange funds at closing to cover the cost of repairs, when possible.

Appraisal – Between days 10 and 25 of the contract the lender will order an appraisal of the home. The hired appraiser will assess and determine the value of the home. This ensures the lender and the home buyer that the home is worth the purchase price.

Homeowner’s insurance – When purchasing a home the buyer must purchase a homeowner’s insurance policy. This protects the homeowner from catastrophic events that could cause damage to the property. Typically when the property is financed, the total monthly payment for the mortgage includes the cost of insurance, as well as property taxes. This is called having an escrow account.

Clear to close – When all required steps are completed by the buyer and seller, the lender will do their final check and give the clear to close! The title company facilitating the transaction will provide closing documents the the buyer, their agent as well as the seller and their agent.

Closing day – They have finally made it! On closing day buyer, seller, their agents, title company, and lender will meet at a pre-determined location and sign all the necessary paper work to finalize the transaction. Both buyer and seller are made aware one final time, of all the terms of the transaction, and equitable title is exchanged. This can be a very exciting day for all parties involved, especially a first time home buyer. It is a very gratifying feeling to guide your clients to closing. Buying a new home is a big step and one they should be proud of!