You may think that finding your dream home is the first step on your journey to becoming a homeowner in the Greater Seattle area, but the reality is that your first step should actually be getting “pre-approved” for a mortgage BEFORE you start house hunting. If this is your first time buying a home, approaching mortgage lending in the Seattle area can be daunting. In this step-by-step guide, we run through how to apply for your mortgage and lock in your home loan.
Step-by-Step Guide to Mortgage Lending in the Seattle Area
With 51.5% of homes selling in less than 30 days, the pressure is on. Unnecessary delays could enable another buyer to swoop in and steal your dream home from you. Preparing for what’s to come will streamline the process and give you peace of mind while dealing with the paperwork, so read on.
1. Getting Pre-approved for Your Mortgage
Getting a pre-approval requires an in-depth evaluation of how much house you can afford. Note that this isn’t the same as a “prequalification,” which is just a quick rough estimate performed in minutes. Speaking to a Best Mortgage® Loan Advisor and going through the pre-approval process will tell you exactly how much you can afford to pay for a home and also estimate how much you can expect to pay from month to month once you actually close on a home purchase. Note, that while a pre-approval isn’t mandatory, it can prevent the disappointment of trying to buy a home that you can’t afford. Real estate agents and sellers vastly prefer to work with pre-approved home buyers because they know you are serious and you can close on the purchase offer you are making.
2. Finding Your Home
The next step is to find your desired home and make an offer. While home prices can fluctuate in the short term, homes in the Greater Seattle region tend to grow in value over the long term, so it’s always a “good time to buy” if you plan to live in your home for at least 7-10 years. Real estate is intended to be a long-term investment, not a short term “flip” unless you’re a professional investor. If you’ve already gone through the pre-approval process, knowing how much you can afford to borrow will point you toward homes that fall within your budget.
3. Locking in Your Rate
When you have made a purchase offer on a home and the sellers have accepted your offer, you’re ready to discuss locking in the interest rate on your mortgage. Speak to Best Mortgage® and our Loan Advisors will help you decide when the best time is to lock in your rate. There are many factors to consider and mortgage rates change daily and sometimes more than once per day..
4. Protecting Yourself with Insurance and Inspections
All home buyers must have a homeowners’ insurance policy before closing on the loan to purchase a home. Talk to your insurance agent and get advice on the type of homeowner’s coverage, deductible and rates that they recommend. It is also highly advisable to order a professional home inspection within the first few days after the sellers accept your purchase offer to discover any hidden problems with the house that could lead to costly repairs after moving in. Be sure your real estate agent includes an “inspection contingency” clause in your purchase contract (if possible). In a super hot “seller’s market,” the home sellers may not be willing to accept an inspection contingency, but it is always best to try in any market.
5. Help Your Lender Help You Close On Time
Once the purchase contract is signed by the seller, the clock starts ticking. It’s very important to close on time, meaning that you must close on or before the closing date specified in the contract, or you could lose your “earnest money deposit” and possibly even miss out on buying your dream home. If you follow our advice and get pre-approved by Best Mortgage® BEFORE you make the purchase offer, much of the paperwork will already be done. But if we are still waiting for any documentation from you, it is very important that you submit it to us as soon as we request it. Every day counts when trying to close a loan on time! As we are gathering and reviewing your documentation, we will order an appraisal and title insurance policy on the home you are buying.
6. Underwriting the Loan
If you submitted all the required paperwork to get pre-approved by Best Mortgage® before making your purchase offer, we will already have a preliminary review and approval by the underwriter based on your income, cash and credit. If you did not get pre-approved before making the purchase offer, we will gather all your income and cash documentation, pull your credit report, and submit it to underwriting for approval to confirm that you meet all the criteria for loan approval. The underwriter will also review the appraisal report and title policy to make sure the home value provides sufficient collateral to support the loan amount.
7. Getting the Final Approval
Once the underwriter has completed review of your loan application and supporting documents and verified that the appraisal and title are acceptable, we will receive “final clear to close” approval. Best Mortgage® will order the loan closing documents and send them to escrow for you to sign. We will review the final numbers with you so you will know your exact loan terms (interest rate, payments, etc.) and exactly how much cash you need to bring to escrow to close the deal. You will sign the closing documents at escrow, they will verify your ID and accept deposit of the amount of cash needed to close. The sellers will receive payment for their home from your cash deposit plus the mortgage loan proceeds. Escrow will send the deed to the county recorder’s office and the minute the deed is recorded you become the legal owner of your new home!
Navigate Mortgage Lending in the Seattle Area with Best Mortgage®
Breaking down mortgage lending in the Seattle area into manageable steps will enable you to approach the home-buying process with confidence.
Gain the keys to your dream home by working with a lender who understands the ins and outs of the Greater Seattle area housing market. At Best Mortgage®, we are a family-owned lender with more than 32 years of experience giving you “Honest Advice You Can Trust”® to secure the mortgage that best suits your personal financial needs and goals.
Fill out our Contact Form or call us at (425) 649-6000 to speak to one of our professional mortgage advisors today.
