There are several major distinct steps in the real estate buying process, and many involve the mortgage. It can be confusing for both new and repeat home buyers. This blog outlines basic information about financing process for purchasing Arizona homes and covers what you may want to be aware of before beginning a home search.

Financing Process For Purchasing Arizona Homes

Pre-approval

A pre-approval is a preliminary analysis of your finances and credit history to estimate what you might to obtain for a loan. It verifies that you meet the most basic criteria for a mortgage. Pre-approvals do not certify that you will ultimately be approved for financing, but is a typical first step in the loan process.

Applying for a Mortgage

An application occurs normally after you have an accepted offer on a home. You may be asked for more financial information. The details on the home are also provided to the lender for review. They will require a copy of the Purchase and Sales agreement as well. Your contract will normally specify that you complete an application before a specific deadline.

Performance of an Appraisal

An appraisal is ordered by the mortgage company (although you are typically required to cover the cost) to pinpoint the exact market value of the real estate. Appraisers will compare your property with others that recently sold in the same city within a limited time frame. An exact dollar value is noted. Basically, the value of the real estate must justify the amount that the lender is loaning to you.

Mortgage Commitment

After your personal information and the details on the property are reviewed, the mortgage company provides a commitment letter. This assures the parties that no major issues are present and that the mortgage company is somewhat certain that the loan will close. There may be certain conditions noted in the letter such as an employment verification and final credit check. It is therefore essential not to make major purchases or alter your financial situation even after a commitment letter is granted as it may keep the mortgage from closing.

Clearance to Close

A clear to close is essentially the ending approval of a loan. It verifies that all criteria have been met and that the mortgage company will submit the file to the closing attorney. This sometimes takes place just days prior to the scheduled closing.

The Closing

The settlement includes signing of documentation and recording of paperwork public registry. Always bring official identification and a money order or bank check for any funds payable at the closing. Personal checks or cash are generally not acceptable.

Final Words of Wisdom

Deadlines are a critical part of any real estate transfer, be sure to understand the dates and what you must provide to satisfy each one. Receiving representation from a competent mortgage professional and real estate agent is very important. They can provide you with advice and assistance, monitor deadlines, and make it a less stressful experience. The agent and mortgage professional you choose is so important because it is your earnest money on the line if the deadlines are missed. As a local real estate professional, I can provide assistance with the mortgage and overall real estate process. You may reach me, Kelley Norton, at Realty One Group via phone at 602-330-5856 or email at kelley@azrealtylady.com.