Before you can purchase a home, you need to speak to a lender. They will be able to check your credit score and determine if you are eligible for a home loan. Some things lenders will look at will be: your credit score, consistent on-time payments, long term borrowing experience and a good mix of credit types (student loans, car loans, credit cards etc) They look at these factors to determine if you qualify for certain types of mortgages. It is important to speak with a lender prior to beginning your home search so that you can be prequalified and know how much you can afford. With this knowledge, you can easily create a budget and start looking for homes within that range.

If you can get pre-approved for a loan, it can help speed up the underwriting and buying processes, getting you into your new home sooner.

During the underwriting process, loan underwriters will review the “3 Cs:”

• Your credit history

• Your capability to repay the loan

• Collateral

If you have a positive history of making payments on time, a good credit score, and a consistent income, the turnaround time can take just a few days.

Once a lender approves your loan application, you will be “clear to close.” After this, your agent will have you sign closing documents, pay the down payment, and transfer the home’s title to you!

The buying process itself, which begins when your offer is accepted, takes about 30-45 days to finalize.

However, several factors can affect the buying process, including the property’s location, buyer demand, economic trends and other variables. Before closing, you’ll also need to:

• Order a home inspection

• Get an appraisal

• Conduct a title search

• Finalize mortgage details

• Review closing documents

Your realtor, lender and title company will help you with all of the items listed above.

Yes, you can back out but you may lose earnest money (basically, a security deposit given to the seller upon signing a contract). You can face legal consequences if you back out of the agreement for a reason not outlined in the agreement of sale. This document outlines important details, such as repairs the seller is responsible for and contingencies of the real estate deal. Make sure you read this document and reach out to your realtor with any questions,

However, there are certain scenarios where backing out of the purchase is understandable. If you lose your job, can’t sell your current home or can’t get approved for a mortgage. Other acceptable reasons are: a failed home inspection, unresolved repair problems or difficulty transferring the title.

Closing costs are the fees you pay when finalizing a real estate transaction, whether you’re refinancing a mortgage or buying a new home. These costs can amount to 3-6% of the mortgage balance so it’s important to be financially prepared for this expense.

Closing costs include a range of charges for services related to applying for a mortgage. Some of the costs are related to the property such as appraising it to verify its value and searching property records to ensure a clear title and others are related to the paperwork involved, including attorney fees (in some states) and the expense of originating and underwriting the loan.

You can check if you’re eligible for financial programs or loans available through the FHA (Federal Housing Administration) or the VA (U.S. Department of Veteran’s Affairs). If you’re a first-time buyer, for instance, you may qualify for an FHA loan or a home buying program.

If you meet the criteria for a VA-backed loan, you might not have to make a down payment on a home. You’ll also receive better terms and interest rates compared to most traditional bank loans.

For additional ways to save, financial experts recommend saving up for a 20% down payment on a home. Doing this will ensure that you won’t have to pay for private mortgage insurance, which can cost anywhere from .3% to 1.2% of a loan’s principal balance every month.

Earnest money is often described as a “good-faith deposit” from an interested buyer. The amount is usually 2-6% of the home’s purchase price, and it shows the seller that the buyer is serious about closing the deal.

As the sale is pending, the earnest money is placed in escrow (an account held by a third party until the sale is finalized). At closing, the funds can go towards closing costs or a down payment on the home.

If the buyer has to back out of purchasing the home due to a contingency in the escrow agreement, they will get their earnest money back. However, if the buyer chooses to back out of the deal for any other reason, the money will go to the seller instead.

A down payment is a percentage of the sales price that a lender requires the home buyer to pay. Down payments can come from a bank account, a stock fund, an inheritance, or a retirement portfolio.

Down payments can also come from a family member in the form of a gift.

Down payment requirements will vary based on your loan. Loans for a primary home will have different down payment requirements as compared to secondary or investment home.

The type of loan you choose can affect your down payment, too. Conventional, FHA, VA, and jumbo loans each feature varying down payment minimums, and the property type of your home will play a role, too.

Making a down payment of 20% is ideal because you can avoid paying private mortgage insurance (PMI), but more realistically, lenders usually require at least 3% for the sale to go through

In some circumstances, you may not have to worry about a down payment at all. If you’re a first-time buyer, veteran, or rural resident, there are special programs available to help you afford a home.

Title insurance protects homeowners from claims against their home that happened before they purchased it, such as a prior owner’s failure to pay taxes or fairly compensate contractors.

If you have title insurance, you’ll be covered for legal fees or title disputes that may come up during your time as the homeowner.

There are actually two kinds of title insurance:

• Lender title insurance is usually required when selling a home. This type protects the lender from any claims made on the house.

• Owner title insurance is completely optional, but paying this one-time fee will protect you from unexpected issues with the home’s title for as long as you own the house.

Purchasing both insurance policies is usually a good idea, and the combined cost is only about 0.5% of the home’s purchase price.

Sellers generally will respond in 24-72 hours to an offer, but this can vary depending on the state of the market, if it is an estate with many beneficiaries involved in the decision making etc.

If a bank is selling a home (short sale/foreclosure), the response can take several days or weeks.

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