Buying the house

After you find your home, you are ready to make an offer. Now you have to decide what you want to bid. You will need to make some careful considerations before you decide how much you want to offer the seller.

The benefit of prequalifying

You can possibly improve your bargaining position by demonstrating to a seller that you're financially ready to buy by prequalifying for a mortgage.

Know where you stand

Make sure that you have educated yourself in the market. Look at: comparable sale prices, who else is offering on the house, how much is being offered by other possible buyers, and the seller's motivation on your particular house, so that you have strong and safe ground to stand on. When you research each of these areas you will feel more confident in making your offer which will make the whole process much easier on you.

Making the offer

Now, you are ready. You know what you need to about the house. You want to make the seller an offer. You will make your offer in a written contract. You may write up the contract on your own, unless you are using a real estate or seller's agent in which case the agent will supply a standard purchase agreement that contains the details of the offer. This agreement is binding, so you will want to make sure you completely understand what it says. You may want to have your real estate agent or attorney go over the contract with you.

Usually, you will include earnest money with your written offer. Earnest money is similar to a deposit. It shows that you are serious about buying the house. Normally, the amount of the deposit is negotiated between you, the buyer, and whatever agents may be involved in the purchase/sell. Earnest money is either applied to the down payment or forfeited if you back out of the deal.

After your offer has been made, the seller may come back to you in writing requesting a higher amount. This is called a counter offer. You may counter back and forth a few times. Once you and the seller agree on a price and sign a contract, your earnest money is held in an escrow account until settlement.

Time to apply

Now is the time to finalize your financing by formally applying for your mortgage. Prequalifying will reduce the amount of time you need to apply due to the information you have already provided.

The application process can take anywhere from several days to several weeks. You'll be asked to provide quite a bit of detailed information. An appraisal of the property will be required, and your credit will be checked.

What you'll need to provide

You will need to provide quite a bit of information when you apply for your mortgage. To ensure you have the records you need, here is some of the paper work you will need when you apply at Simmons Bank:

• Copy of signed purchase agreement
• W-2's for the past two years (or complete tax returns, if self-employed)
• Most recent pay stubs covering the last 30 days
• The last month's bank statement for: Mutual Funds / Annuity / Checking / Savings / 401K Statement
• Social Security / SSI Verification
• Copy of divorce, if a divorced person
• If VA loan: Certificate of Eligibility and DD214
• Completed Residential Loan Application

If you are self-employed, furnish the following:

• Last two years tax returns, personal and business.
• If partnership or incorporated, a current year-to-date financial statement on the business which includes balance sheet and income/expense statement.

Appraisals

The next step is to have the property appraised by a licensed appraiser with a good reputation to make a thorough evaluation of the property. Simmons Bank will make arrangements for the appraisal.

It is likely that the contract you signed with the seller includes stipulations that say the home or property must pass certain inspections before the purchase is made.

Closing the deal

After completing all of the previous steps, it is time for closing or settlement date to take place.

Closing is when you put all of your ducks in a row. The papers are signed, the money is paid and the property title trades hands. Make sure you (and your attorney if applicable) review your settlement documents before you sign them.

Now you are a new home owner. Just as you will take careful care of your new home, it is a good idea to keep a careful watch on your mortgage.

Read About Affording Your Home