A pre-qualification is a much easier process, so it may be best to start there. You will give your lender an overall financial picture, including your debt, income and assets. For a pre-approval, you will need more information and will usually fill out a mortgage application. The lender will need information such as:
A real estate agent’s job is to look out for your best interests. It is important to work with an agent that you trust and feel comfortable with. You will discuss what you are looking for in a home and your budget. Your agent will find homes that fit your criteria and then schedule showings to see the ones you've chosen.
Your agent will draft a Buy Sell Agreement that includes terms like purchase price, earnest money and deposit, type of financing, closing date, contingency dates, etc. You can sign the offer in person with your agent or electronically over email.
Keep in mind, multiple offers are a common occurrence in the Bozeman market.
After the offer has been submitted, you may receive a counter offer. If the seller counter offers, negotiate until you come to terms you can all agree with. If you can’t come to an agreement, it’s ok to walk away.
When your offer is accepted, you will write an earnest money check to the title company. The amount you are writing the check for will be in your buy/sell agreement.
Your agent will open escrow at the Title Company of the seller's choosing, if the listing agent hasn’t already done so. Your agent will give you the contact information you need for the title company. Give this information to your lender and your insurance agent.
Lenders may ask for additional information.Do not alter your financial situation while in escrow. When the file is complete, the lender will submit it for final underwriter approval.
The lender will order an appraisal to be done on the property. In transactions where financing is involved, an appraisal will be required. The home will typically need to appraise for AT LEAST the agreed purchase price.
Most properties will require the buyer(s) to sign a Mold Disclosure and an Owner's Property Disclosure Statement. Some will require additional disclosures (for example, homes built in 1978 or earlier are required to have a Lead Based Paint Disclosure).
This coverage will protect your home in case of damage by unforeseen circumstances.
Once the home inspector is finished, you and your agent will walk through and around the property so the inspector can go over what they have found. The walk through typically takes about an hour. They will then send you their inspection report and you can negotiate necessary repairs or replacements.
If the home inspection turns up health and safety issues, this asks the seller to address those issues or give you a credit for them. No home is perfect, even new construction.
Make sure all contingencies in your contract (like appraisal and inspection negotiations) have been completed by the date(s) in the Buy Sell.
Inspect the property to make sure it’s in the same condition as when you agreed to buy it. Any serious issues need to be addressed before closing.
Three days prior to closing, you will receive a closing disclosure statement from the Title Company showing the breakdown of costs for the transaction. Read through it and check for inaccuracies. If you have questions, contact the Title Company.
Call all of your current utility companies to schedule cancellation of your current services. You will also need to call the utility companies that service your new property to be sure there is no delay in service. The sellers will have scheduled a cancellation of services in their name for the day of closing.
When going to the Title Company for closing, be sure to bring your driver's license and any documents or forms of payment the Title Company has requested.
Bring a certified/cashier’s check payable to the Title Company. They will collect all monies and disburse the funds to the appropriate parties.
Your property deed, seller’s reconveyance and deed of trust will record in the public records at the courthouse. The Title Company will notify you and your agent when it records. Then you can pick up the keys!
The most common type of loan, a fixed-rate loan prescribes a single interest rate—and monthly payment—for the life of the loan, which is typically 15 or 30 years.
The rise and fall of interest rates won’t change the terms of your loan.
Offer interest rates typically lower than a fixed rate loan for a period of time—usually five or 10 years. But after that, your interest rates (and payments) will adjust, typically once a year, corresponding to current interest rates.
So if interest rates go up, so do your monthly payments; if they drop, you’ll pay less. If you have a lower credit score and can’t get a good fixed rate, this may be an option.
A Veterans Affairs (VA) loan is available to United States Veterans, Service Members and not remarried spouses. It can be a good alternative to a traditional mortgage. If you qualify, you can score a sweet home with no money down and no mortgage insurance requirements.
VA loans have strict requirements on the type of home you can purchase: It must be your primary residence, and it must meet “minimum property requirements”. It’s also worth mentioning that the process from the time a home is under contract until closing can be more lengthy than other financing options.
While most typical loans require a down payment of 20% of the purchase price of your home, with a Federal Housing Administration loan, you can put down as little as 3.5%.
If you don’t have enough for a down payment, these loans may be the right choice for you, but these loans come with several limitations or restrictions. Most loans are limited to $417,000 (in Gallatin County it is $386,250 per unit), rates are typically fixed and are for 15 or 30 year terms. Buyers are also required to pay mortgage insurance which hovers around 1% of the cost of your loan. (Mortgage insurance is a policy that protects lenders against losses that result from defaults on home mortgages.)
USDA RD loans are designed for families in rural areas. The government finances 100% of the home price (no down payment needed) and offers discounted interest rates.
This can be good for families in rural areas who are struggling financially. A requirement, however, is that your debt cannot exceed your income by more than 41%, and, like the FHA loan, you will be required to purchase mortgage insurance.
If you’re purchasing a home before selling your previous house, this can be a great option. Lenders will put your current and new mortgage into one payment and once your home is sold, you pay off that mortgage and refinance.
If you have excellent credit and a low debt-to-income ratio, this could be for you as long as you don’t need to finance more than 80% of the two homes’ combined value. If you met the requirements, this can be a simple way of transitioning between two houses.
Nicole Taranto Real Estate
Berkshire Hathaway HomeServices Montana Properties - 2001 Stadium Drive, Bozeman, Montana 59715
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