Seven tips for the first-time homebuyer in today’s market

Spotlight on Finance

Joel Bisaillon Jr. is vice president and district sales manager, KeyBank Mortgage, for Key’s Capital Region. He may be reached at either 518-257-8601 or joel_bisaillon@keybank.com.

What to expect from the mortgage process

When it comes to getting a loan, doing your homework pays off. You will want to make sure you know what to expect from the process, particularly if you are a first-time homebuyer. The following list will help prepare you.

Preapproval. A preapproval is an application for credit and a lender's written commitment (subject to verification) of how much they'll let you borrow. Getting pre-approved will show home sellers you are a serious buyer.

Loan application. This is how the bank determines if it will make a loan to you. You will need to provide pay stubs for the past 30 days, W-2 forms and tax returns from the past two years, as well as statements from bank and investment accounts. The lender will also examine your credit history while reviewing your loan application.

Lock in rate. To ensure you receive the rate you were quoted, you may elect to lock in your rate by paying an up-front authorization fee.

Points. You can pay points, a dollar amount based on a percentage of the loan amount, to the lender to reduce the interest rate on the loan. It adds costs up front but can help save you money over time.

Appraisal. The appraisal is conducted by an independent professional and determines the value of the home.

Down payment. Lenders prefer that a borrower have 20 percent of the purchase price for the down payment. If you make a down payment of less than 20 percent you may be required to purchase private mortgage insurance (PMI). PMI protects the lender if you default on the loan and is part of your monthly mortgage loan payment.

Loan review process. After the appraisal, the loan file is submitted to the lender for your loan to be reviewed.

Escrow and title preparation. A title company will hold the money and documents until all conditions of the mortgage approval are met. Title work will be prepared, including a title exam to ensure the title to the property is clear. Other documents such as the mortgage note and deed will be prepared.

Closing costs. The costs associated with processing and closing a loan, such as application fees, points, title, insurance and credit processing.

Signing. The documents will be sent to a title company for you and the seller to sign. Any remaining down payment and closing costs will be due at this time.

Title transfer. When all funds are collected and disbursed and the contract has been verified, the title is transferred—and you’re a new homeowner.

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