Buy A Home

Suze Orman, a financial guru and author of a popular book titled The Road to Wealth, recommends the following steps to test your home purchasing power before you buy:

Step 1: Figure out how much buying a home in your estimated price range will cost you monthly, including property taxes and expenses.
Step 2: Subtract your monthly rent from the amount you came up with from step 1 (e.g. monthly home ownership cost $2,900 – monthly rent: $2,300 = $600 difference); take note of this difference
Step 3: Open a new bank account and make a deposit for this additional amount (in our example, it’s $600) on the first day of each month
Step 4: Make the same deposit each month for 6 months. If you can make the payments on time, without delays, or “financial stress” then this is a good indicator that you may be ready to buy a home.

If you think you failed the test above, no worries, there are ways you can improve your financial situation before you start searching for a property to buy. The following can help:

• Reducing debts and or expenses – the principles of distinguishing ‘wants’ from ‘needs’ can be applied to effectively filter out unnecessary spending and reduce your monthly expenses and debt.
• Build your credit by paying off existing debt on time.
• Pay off high interest rate debt like credit cards, first.
• Build up savings for a down payment and reserves – 20% or more is recommended for a down payment

1. Pre-approval – When pre-approved a buyer’s negotiating power is increased
2. Loan search – Our mortgage professionals can help you explore your mortgage options and find the best loan for your unique situation
3. Property hunting – Search for and find your home, and have your realtor negotiate the purchase
4. Loan application – Make an effort to be as accurate and complete as possible with all of the information you provide
5. Supporting documentation – Timely submit all of the requested documentation and paperwork supporting your application to your loan professional
6. Appraisal – A professional appraiser will determine the market value of the property; this allows you to know the real value of the prospective home and avoid overpaying
7. Title search – This will determine if there are any outstanding liens on the property, back taxes owing, debts owned by the current owners or any other issues with the title and ownership of the property
8. Termite inspection – Termite and water damage problems should be addressed before closing
9. Processor’s review – All pertinent information and documentation supporting the mortgage application will be sent to the lender’s underwriter by your mortgage professional
10. Underwriter’s review – Based on the information and documents submitted by your mortgage professional, the underwriter will make a decision on loan approval
11. Mortgage insurance – This is usually required for borrowers that unable to make a 20% down payment on the property
12. Approval – When the specified requirements are met, the mortgage loan is approved
13. Other Insurance – You will be required to secure insurance such as hazard, flood, fire or even earthquake insurance for the property
14. Signing – Signing the necessary mortgage paperwork for final loan and escrow
15. Funding – Once the loan is approved and the paperwork signed, the amount of loan is sent to the escrow company
16. Closing – Documents transferring title to you will be officially recorded by the County Recorder in your area
17. Confirmation of funding – You will receive confirmation of the disbursement of loan proceeds as authorized by the lender
18. Congratulations you are now a homeowner!