Purchasing a New Home in Colorado: A Step By Step Guide

A Step by step Guide to buying a home in Colorado

first-time-home-buyer-nj

The purchase of a new home is, often times, very scary because it is the largest purchase of your life.  There is no reason the process needs to be painful and scary.  My goal as a mortgage broker is to make the process as painless and enjoyable as possible.  I am not saying there won’t be hiccups along the way.  But, with my extensive experience, I am able to alleviate a lot of the problems before they exist in the loan approval process.

 

Step 1: Initial Application

The painless process begins with a one on one meeting, either over the phone or in person, to get as much information about you as possible.  We will discuss credit, income, down payment funds and loan options.  By the end of this meeting, we will have a clear plan of action leading to the final goal of home ownership.

 

Step 2: Credit Review

If credit issues become evident, we will take the time to review each account and the steps that need to be taken to improve your credit rating or dispute incorrectly reported information.

 

Step 3: Collection of Documents

Once the loan application interview is complete and the credit report has been acquired, all supporting documents need to be submitted.  Below is a general list of what will be needed.  Each applicant is different, so additional documents could be needed.  This is just a starting point.

  • 1 month of most recent pay stubs
  • 2 months of most current bank statements.  All pages for all accounts, including 401K retirement funds, IRA funds, etc…
  • 2 most recent years W-2s
  • If Self-employed, 2 years most recent tax returns
  • If recently divorced, Divorce Decree
  • If filed Bankruptcy in the last 7 years, we need all pages of the BK papers.
  • If there has been a foreclosure or short sale in the last 7 years, please provide all papers related to the transfer of property.
  • If receiving a monetary gift for down payment funds, a gift letter and proof of ability to give, from the donor, is required.

 

Step 4: Loan Is Processed

Once the loan application is complete and the supporting documents are received, the loan gets processed for title insurance, homeowner’s insurance, employment verifications, etc… and is then submitted to the lender for underwriting.  Typical turn around times are 24 hours in setup and 48 hours in underwriting.  However, if a critical documents are missing, this could delay the process.

 

Step 5: Underwriting

The loan passes through loan setup and then compliance with most lenders before it goes in line to be put in front of an underwriter.  Typically, this will take 24-48 hours.  Then it will sit in line for an underwriter for another 48 hours.  Once the underwriter has reviewed the complete loan package, he/she will either, deny the loan, suspend the loan or provide a list of additional documents that are needed to complete the underwriting decision.

  • Denial: The lender does not feel the loan fits into the guidelines for purchase.
  • Suspension: There is a critical document missing that must be obtained before the underwriter will make a decision.  This is not an approval or a denial.
  • Approval: The underwriter feels that the loan meets all guidelines to purchase the loan, pending the additional list of documents is provided.

 

Once the underwriter has issued the additional documents list, we will contact you, the borrower, to provide the missing papers.  The sooner these documents are received, the sooner they will go back to the underwriter for review.

 

Step 6: Home Inspection and Appraisal

While the loan is in line for underwriting, you will be working with your Realtor to complete the home inspections.  We do not order the appraisal until the home inspection is complete and all Home Inspection conditions and resolutions have been finalized.  Once that is complete, then, the appraisal is ordered.  The fee for the appraisal is paid up front and can cost between $350 and $650.  It depends on the type of loan and property being appraised.

 

Step 7: Final Review and Compliance

The underwriter will review the documents, including the appraisal and if everything has been provided and cleared.  The lender will issue a “Clear to Close”.  We are then able to order documents and figures to be sent to the title company for the final HUD 1 Settlement Statement.

Our goal is to provide the loan closing figures to the title company in such a timely manner that, you, the borrower, will have 24 hours to review them prior to the closing.

 

Step 8: You Made It To Closing

We pride ourselves on attending each and every closing and are available if something does go wrong.  Be sure to bring a legal form of identification and if funds are required to close, they will need to be in the form of a cashier’s check.

 

Contact Tiffany Hughes if you need more information.