BUYING YOUR HOME
Offer accepted, Now What?
It all starts when your offer is accepted by the seller and you deposit your earnest money in escrow. This lets everyone know you’re serious. Next, a little paperwork. We will work with you to update your loan application and your file with your most recent income and asset documentation. You can securely upload everything via our loan center at your convenience. Going digital allows us to e-disclose and get e-signatures while saving you a ton of time and bother. Once the disclosures are signed (or e-signed) we'll order the home appraisal for you.
We'll combine your updated information with the preliminary title report from escrow and the appraisal, and submit your file
to our in-house underwriting department. This is a huge benefit as it helps to speed up the process. Underwriting will issue a conditional approval. We get them the conditions and they issue a final clear to close. Then we issue loan docs for signature at the escrow company and fund the loan. All the while, you're able to track your loan's status online 24/7 via our loan center. When it's getting close to the end of the process, you'll want to shop for movers and arrange for the transfer of utilities and services.
Once the docs are signed, the loan has been funded, and you've sent in your portion of the down payment and closing costs, the final step is for the papers to be filed with the county. You're now the official owner of the home.
Call the movers and get ready to build some lifelong memories!
Cost of Buying
Home buying has contributed more to the wealth of average Americans than any other investments, but investments are a 'spend money to make money' proposition. They require careful planning and consideration. It's wise to understand the costs associated with investing in a home. Discuss your situation with one of our trusted mortgage advisors and your financial advisor to get a true picture of your specific costs. We've outlined some ideas below that you'll want to understand before you move forward.
An earnest money deposit is typically required when you make an offer to purchase a home. This fee is a security deposit, held in a trust account, typically by a neutral third party – usually an escrow company or a real estate attorney in some states. Its purpose is to signify the buyer's serious intention to complete the purchase. The deposit is forfeitable if the buyer cancels the purchase for any reason other than reasons specified in the purchase agreement. So don’t enter into this lightly.
If the purchase is to be completed, the earnest money is applied to your portion of the funds – usually the down payment and the closing costs. A rule of thumb is to expect to pay an earnest money deposit of 1%-3%.
A down payment is typically required to purchase a home, unless you're a qualifying veteran of the U.S. Armed Services using a VA from the Veterans Administration. An initial payment of 3, 5, 10, 20% or more is likely to be required based on the unique characteristics of the borrower and the transaction.
Other fees that may be required to be paid at the closing include: private mortgage insurance, homeowner's insurance, title insurance, escrow/attorney fees, points and/or origination fees, document preparation fees, survey fee, pest or mold inspection, property taxes and recording fees. That may seem like a lot, but keep in mind that not all of these fees will apply in every situation. It's possible that some fees will be waived or paid by the lender or seller.
A Commerce Home Mortgage advisor can guide you in understanding which fees and costs apply to you.
Benefits of Home Ownership
Owning a home is a wise financial strategy for a number of reasons.
Painless Savings — You pay off a small portion of the loan with each payment. So you’re likely to accumulate meaningful equity over time – a benefit that renters cannot enjoy.
Tax Perks — Homeowners (with some limitation) can deduct the interest portion of their payments, as well as property taxes paid. Plus, capital gains (profits) from a home sale are excluded from income taxation. Consult with a tax adviser for specifics.
Hedge Against Inflation — Typically, home prices and rental rates rise faster than inflation. This can make homeownership a smarter financial move than renting.
Wealth Accumulation — On average, homeowners have significantly more accumulated wealth than renters.
Leverage — A small down payment has the potential for significant gains.
Buying Your First Home
Homeownership is a serious commitment. We've provided a little guidance below. Talk it over with family, trusted friends, your real estate professional, financial advisor, and mortgage lending professional.
Emotional benefits and risks
Owning a home creates a strong sense of pride in most people. It's a significant life accomplishment and reflection of your personality. It’s also a place where family memories are made. Be sure you’re emotionally prepared to be a homeowner.
Financial responsibility and risks
After you've taken possession of your home, you’ll be responsible for mortgage payments, property taxes, and homeowners insurance. And don't forget utilities, maintenance, and repairs. Keep in mind that single-family homes are typically an excellent investment, but they can and do lose value in some situations. Our lending professionals can introduce you to a trusted financial advisor who can help with your budget and discuss the potential financial risks.
Geographical benefits and risks
You'll likely choose to buy your home in a neighborhood with good access to transportation, schools and other amenities. However, homeownership can open you to risks. While a renter can easily relocate when employment or family situations change, a homeowner will have more difficulty doing so. When thinking about buying a home, consider the location carefully in order to maximize your future options.
Why You Should use a Real Estate Professional
Real estate professionals are trained and licensed. Their careers depend on abiding by a code of ethics. Many have a fiduciary responsibility to their clients. Typically experts in their local real estate markets, they provide reliable assistance whether you’re buying or selling property.
Commerce Home Mortgage has great relationships with many wonderful local real estate professionals. Please let us know if you need help finding one.
What to expect during the home buying experience
Home shopping can be a lot of fun. But finding the right one can take anywhere from a few days to several months. It depends on how many homes are on the market, your timeline for moving, or your specific needs. Once you've made your choice, the sale process can typically be completed in just 30 days or less.
We strongly advise that prospective home buyers get their loan "Pre-Approved" for a mortgage loan. This gives the buyer important information about the price range in which they’re looking and lets sellers know that you’re to be taken seriously. Note that a “Pre-Approval” is NOT a commitment to lend, because the property you want to buy must first be appraised. Instead, it gives sellers confidence that when you submit an offer you’re able to complete the transaction.