Qualifying for a Mortgage | Home Buying Process

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Source: http://www.providentnj.com/site/personalservices/homeloan/firsttimehomebuyer/content.aspx

7 Steps to Homeownership

1. Pre-Qualify for the Loan
2. Get Your Realtor
3. Decide On What You Want
4. Research Home Values
5. Tender Your Offer
6. Do Your Inspections
7. Close On Your Home


1. Pre-Qualifying For the Loan

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The first step to the home buying process is to get pre-qualified by a mortgage lender. You can use your bank, your credit union or a mortgage company.

When you get pre-qualified they will tell you:

  • How much home you can afford
  • What your closing cost will be
  • If you need to do anything before getting your loan

FYI: As a rule of thumb you can afford 3x your annual income.

How The Lender Pre-Quals You

The mortgage lender is going to ask you about your monthly income and debts. To calculate your mortgage payment they will determine:

  • A mortgage payment you an afford that will not exceed 28% of your income.
  • A total monthly payment (mortgage payment plus your bills) that don't exceed 36% of your income.

Mortgage Down Payment

Most mortgages will need you to put down between 3% - 20% as a down payment. But there are some 100% products that we have seen coming back to the market.

Advantages of Pre-Approval Letter

After your meeting with the mortgage lender you will get a pre-approval letter. This will be presented to the seller with your offer. This will help convince the seller that you are able to buy the property.

Also, this helps if you are competing with another buyer. If the other buyer didn't present a pre-approval letter then you will most likely win!

How To Lower Your Mortgage Payment

In reviewing mortgage programs there are 3 ways to lower your payment:

1. Put down more money.
2. Take a loan out for a longer period.
3. Find a lower interest rate.

Get more information on qualifying for mortgage.

2. Get Your Realtor

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Please contact us at 904-273-0125.

We are free to you! And we will represent your best interest!

We will:

  • Recommend lenders
  • Help you find your home
  • Negotiate for your home
  • Help you negotiate the hurdles so we can get to closing.

3. Decide on Your Wants & Needs

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In finding the right home for you we need to know what you are looking for.

In tough markets it helps to separate out your wants & needs. If you don't know these it's ok. In a brief conversation with your Realtor we can tell you what is possible in the price range you are looking.

Start with the basics:

  • Location
  • Price Range
  • Smallest Bed, Bath & Square Footage you can live with
  • Longest Commute Time you can live with


Then you can move on to specifics:

  • Views
  • Lot Size
  • Neighborhood Features such as gated security, tennis courts, golf course, etc.
  • Property Features such as pool, garage size, etc.

4. Research Home Values

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The good news is just because the home falls in your price range does not mean it has to cost that much. In a normal real estate market the seller is expecting to negotiate.

So ask your Realtor to do a market analysis. This will show you what similar homes have been selling at.

Please don't rely on an automatic valuation you found online such as zillow. They are unreliable.

5. Tender Your Offer

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The next step is to present an offer in writing.

  • Your Realtor will write it up for you.
  • They will tell you the normal closing cost.
  • They will give you a cost estimate sheet.
  • They will develop a negotiating strategy for you to get the home at the best price.

Expect to go back and forth a couple times. And remember it is not true unless it is in writing and signed by all parties.

6. Do Your Inspections

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The bank will order out the appraisal. So you don't have to worry

It's your responsibility to order the home inspections. This is plural because you will be ordering a wood destroying organism inspection (WDO). Also if there is a septic system or well then you want to have those inspected.

Your Realtor will give you a list of approved home inspectors. But you can use whoever you want as long as they fall within the guidelines for a home inspector.

Once you have the home inspection the Realtor will review it with you.

  • They will let you know what they think the seller will repair and what they won't.
  • They will let you know their thoughts on the inspection if something major comes up.
  • Remember this is another negotiation. The Realtor will help you make a request that should get all your concerns taken care of.

In our area you have an opportunity to check on the repairs after they are done. Then another opportunity to walk through the home before closing.

7. Close On Your Home

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Congratulations! The last step in the home buying process is closing.

This is where you sit across from the seller at attorney or title insurance office. If you can't be there don't worry. Your Realtor can set up a mail away.

Also if you don't want to be in the same room with the seller ... no problem. Just let your Realtor know.

You will receive your closing statement before closing.

Your Realtor will review it against the contract to make sure it is correct. This will tell you how much you will need to bring to closing. You will need to wire the funds or bring a cashier's check (if they will accept that).

The closing is actually you signing your mortgage papers. The process is as follows:

  • You give your driver license or other picture ID to the closer for them to copy.
  • You sign your mortgage papers which take 30 minutes to 1 hour

Ready to look at homes? Need to sell your home? Have a question? Let us know how we can help:

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