Buying a home in Utah can be an equally daunting as exciting prospect for many; regardless if it's a newly-wed couple deciding to set their roots and grow their family or if it's a seasoned homebuyer seeking to broaden their real estate portfolio. From narrowing down a preferred neighborhood with ideal amenities and easy-commuting accommodations to the desired square footage and purchasing price, it can prove to be an overwhelming ordeal for even the most experienced of home buyers. In light of this, we've comprised an extremely beneficial home buying guide to follow in order to make the entire home buying endeavor as quick, efficient, and favorable as possible for all prospective homebuyers in Utah.
With an endeavor as elaborate as buying a home in Utah is, it's absolutely crucial to approach it in a step-by-step process to ensure that financing, property acquisition, and favorable mortgage rates are effectively present.
What is pre-qualification?
When a potential home buyer is pre-qualified for their impending home purchase, it opens up many opportunities that can affect the overall buying process quite drastically. For instance, when many prospective home buyers that have made overtures to become pre-qualified for the purchase of a [new] home, they are often tremendously benefited by knowing a general ballpark figure of the amount that they are approved for. This enables them to make educated and applicable decisions regarding what home they purchase, where it is located, as well as what features and amenities the home is ultimately supported by. Determining the approximate amount that a home buyer is pre-approved for can be decided in several ways, such as current/existing finances, credit score, as well as previous lending & borrowing history.
Understanding whether a particular credit report is favorable or not in terms of loan potential can often rely on several factors; including loan transactions in the past, previous balances paid in full, or current payments on a loan being satisfied in a timely fashion.
Check your own credit score before meeting with a lender.
Obtaining one's credit score is an essential aspect of purchasing a home because it provides the prospective home buyer with a clear baseline of their options in which to establish a favorable mortgage in the future; if not exploring other financing options surrounding their home's acquisition altogether.
Verify report for accurate information.
As with most worthwhile endeavors that surround a large purchase (such as financing a new home), it's always prudent to verify that the information pertaining to a credit score/report is accurate, authentic, and applicable.
Paying down high credit balances may positively affect your credit score.
Considering a positive credit report can immensely determine whether a [new] home buyer is (pre)approved or receives an ideal rate for the home's mortgage, it can be undeniably beneficial to improve one's credit score, boost its rating, and ultimately be the recipient of a preferred mortgage for their home. How this credit report improvement that can positively impact one's overall 'lendability' can be achieved through many avenues; chief among them being reducing the balance of a current high credit loan or settling any outstanding arrears against an existing line of credit.
Set up payment plans.
While it's understood that not every would-be home buyer will feature a 4-figure credit score or droves of excess finances, it does go with saying that promptly addressing any debts or strikes against a purchaser's credit report is always recommended. It's been shown that outstanding debts or financial obligations regarding an incursion of credit-based liability can be pre-emptively corrected by incorporating a reasonable payment plan to lower credit balances and thus increasing the likelihood of an advantageous mortgage rate.
Becoming better acquainted with your loan originator can open a wealth of opportunities that can otherwise be overlooked and detrimentally affect the outcome of the loaning process. Hence our emphasis on meeting your loan originator firsthand as opposed to relying on mediators or common-interest representatives.
Establishing a comparative estimate of one's finances that surround recent expenses or overall expenditure not only creates loan-transparency but it also promotes the possibility of consolidating unnecessary debt while simultaneously prioritizing recurring financial obligations.
It largely goes without saying, but making efforts to obtain a preferred mortgage rate or stellar interest costs surrounding a home purchase must first be enacted by becoming aware of where one stands in their current finances or debt-based obligations.
For those home buyers that are interested in becoming pre-qualified for their upcoming home purchase, it's important to be aware of a few pertinent aspects of the pre-qualification process.
While on the surface, understanding the pre-qualification process that relates to buying a home can appear intimidating initially, it's worth noting that the particulars of the process can best be summed up quite simply: pre-approval for a home loan is largely contingent upon an agreeable credit rating, proof of income, the inclusion of assets, employment verification, and any other applicable documentation that reflects favorably in the eyes of the lending company.
With something as imperative as purchasing a new home or enjoying a cost-effective mortgage regarding that selfsame home's ownership, it's rarely a bad idea to shop around, meet with multiple realtors, and commission their services accordingly.
Avoid Dual Agents
Buying a home, regardless of its size, price, or overall appeal, can be a painstaking process when there is more than one realtor being assigned to a particular home buyer. Overlapping schedules, lulls in communication, unnecessarily competitive home costs, or just a general lack of cohesion are but a few of the many detriments to utilizing more than one realtor or real estate agent.
Interview several agents before choosing one
Use the local housing market and its inherent contributors there within to your utmost advantage by interviewing several real estate agents prior to committing a particular realtor; let alone deciding on an actual property for subsequent purchase.
How To Hire An Agent Based On Competence
Granted that house hunting is by far the most exhilarating portion of the home buying process, it's worth remembering the importance of actually shopping around in more ways than merely comparing featured layouts or designs of the future home. Ideally, a purchased home is centrally located to promote easier commuting, supports the option for further expansion (renovations, remodeling, or home additions) later in the future, and does not impose an unreasonable financial burden for its continued upkeep as the years progress.
Location is key
As many homeowners and future home buyers will attest to, a prime area for one's home is not solely desired due to the ease in which the home affords traveling to and from its geographical location. Often, a preferred location is based on many factors in addition to the simple convenience of commuting; such as the immediate school districts nearby, the proximity of retail establishments, and the quality of the neighborhood's population.
Be aware of the condition the home is in
It's largely understood that many homes, regardless of the year they were built or the frequency in which [preventative] maintenance was affected, often have underlying issues that will ultimately require rectification; usually in the form of home repairs, renovations, or property restoration service(s). This is why it's absolutely essential to know the prospective property being purchased rather intimately in terms of the home's current condition as well the overall level of upkeep before venturing forth with its purchase.
While the age-old adage of "Good things come to those who wait." can definitely be applied to the home buying/purchasing arena, it's actually very responsible as a [new] home buyer to initiate the loan process with proactivity as opposed to procrastination. Not only can the home loan process take longer than preferred under certain circumstances, it's also a very likely reality that the exact home or property being coveted for purchase may be acquired by another prospective home buyer in the interim. In response to this, it's in the best interest of any home buyers to start the loan process prior to actually choosing a specific home, parcel, or property for future acquisition.
Gather all necessary identification and paperwork
Identity & Income Information
Income Information for Self-Employed Borrowers
Income & Tax Documentation
These documents may not be all-inclusive, but by having these on hand, you will expedite the application.
Submit your application
Begin the home buying process properly by filling out any necessary paperwork, loan forms, or acquisition applications both thoroughly and accurately.
Review your Loan Estimate
Once the loan applications are received and responded to, it's important to review the extent of the pre-approved loan estimate in order to ensure the home buying process progresses rapidly and with minimal delays or "red tape".
Review your Good Faith Estimate
While very similar to a loan estimate in terms of necessity and providing a potential home buyer with critical loan/mortgage information, a good faith estimate is usually acquired for immediate review due to receiving more than a single loan estimate via one or more lender(s).
Clear any additional requests from underwriting
Granted it's true that an underwriter for a home loan/mortgage can make additional requests from a [new] home buyer prior to "greenlighting" the loan's approval, however, it's usually commonplace for the additional underwriter requests to mainly consist of information & documentation that is largely already to be expected: bank statements, loan records, tax returns, employment verification (via W-2s & 1099s, accountant statement or otherwise), current savings & cash reserves, and proof of previous rental/leasing history preceding the date of application submission.
Review your Closing Disclosure
The disclosure surrounding a home's purchase or acquisition is inarguably important to a new home buyer because of the details it provides about the home's purchase costs, innate fees, and forthcoming mortgage. By and large, a home's closing disclosure will contain at least 5 articles of information that is designed to keep the owner apprised of their loan's particulars. Of which is known for including closing costs, projected [monthly] payments, terms & conditions of the loan, and the opportunity to compare the approved loan amount against the loan amount that was originally quantified during the loan estimate phase of the home buying process.
Placing emphasis on key areas of the home's acquisition can go a long way towards ensuring that a homeowner is actually quite satisfied with their purchase in a home; whether it's the elation immediately experienced when the ink dries on their bill of sale or later in the future when it's time to upgrade the home or explore options of reselling the home. Listed below are a few of the key areas of focus for new home buyers; of which are widely recommended throughout the entirety of the real estate industry as a whole.
After the offer is accepted
Once the approval for a home loan has been processed and the subsequent purchase offer for the home has been accepted by the seller, there are still a few elective procedures that must be followed in order to finalize the home's purchase. Although every home or property is inarguably unique in terms of design, price, general condition, and necessary requirements for its imminent purchase, many future home buyers can consolidate their investment in a home by incorporating these techniques and protocols after the purchase offer has been accepted by all parties involved in the property's acquisition.
Understanding (and later appreciating) the condition of a home that is set to be purchased is nearly always best achieved through obtaining a credible appraisal of the home's overall value. As a home appraiser, it's their innate obligation to provide honest, tangible feedback regarding many of the home's existing features; such as the general condition of the house, the integrity of both its structure as well as the foundation on which it is erected, what [building] materials comprise the home's construction, and whether or not there are causes for concern regarding the home's upcoming transfer of ownership.
Negotiations Regarding Appraisal Results
Considering the unlikelihood of a home being completely pristine in terms of necessary repairs prior to purchase or that aspects of the home's inherent elements are without flaw (thus needing correction), it's widely advised to factor in the appraisal results when negotiating the final price of purchasing a new home. As an example, there has been great success in reducing closing costs or expediting the process of a new home purchase by negotiating the fees associated with addressing any issues found in the appraisal versus the initial offers made on the home prior to the appraiser's discoveries.
Take the time to get commitments in writing.
If and when a soon-to-be homeowner opts to negotiate their investment towards purchasing a new home based on the findings of the appraisal of the home, it's critical to get any commitments made by the seller regarding the determinations of the appraisal in writing to ensure their follow-through. To name a few, there are several common negotiation tactics, such as offsetting the costs of the aforementioned repairs by affecting the repairs personally, and go along way when negotiating costs versus commitment during the final stages of purchasing a new home.
As the bureaucracy involved with a new home purchase draws to a conclusion, it can be very beneficial for the intended home buyer to narrow down a precise location, date, and time to finalize the actual closing date. This allows for much-needed time to plan the move-in, affect any pressing repairs, or address any issues that surround the home's loan and/or mortgage.
If you currently have an apartment, condo or house lease
As has been shown, homebuyers that are currently leasing a home, renting an apartment, or financing a condominium are wise to coordinate their upcoming move in conjunction with the conclusion of any leasing obligations or sales finalization(s); if so desired. Doing so affords the home buyer the added convenience of not only eliminating overlap regarding monthly housing expenditures but it conversely can allow for additional time to address any issues plaguing the property.
Now that the final stages of a home's purchase involving loans and lending have been successfully navigated by a home buyer, it's an ideal time to delve into the mortgage aspect of purchasing a [new] home. The keys to a new home open the doors to posterity and a favorable mortgage is a key that can often open the door to long-term financial opportunity. Let us be the locksmith for the keys of your future through our considerable mortgage experience within the local real estate industry in Utah.
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