Purchasing your next home
Size up. Size down. Next home. Dream home. Your goals are changing, and so is what you need in a home. If your family is growing, you may be looking for a bigger house in a great school district. If you’re close to retirement, you might want to cash out your equity and move to a smaller property.
At Solarity, we’re here to guide you toward the best loan for your next stage in life. Your dedicated Mortgage Loan Officer will get to know you and guide you through the process of buying your new home. We offer a variety of mortgage loan products so that we can find the loan that supports your needs.
The contact center representative helped me get the information I needed quickly. For further assistance I was transferred to a mortgage loan representative who was able to help with more information. I will be setting up an appointment with the mortgage team to apply for a loan.”
Buying and selling: it’s all about timing
Finding a new home while selling your current one can be a lot of work. You can make things easier with some planning, flexibility, and having the right team of professionals to help you.
Schedule appointments with the two professionals whose guidance will be priceless: your agent and your Mortgage Loan Officer. Your agent can give you an idea about how long it might take to find the type of home you want, as well as sell your current home. Your Solarity Mortgage Loan Officer can tell you what’s possible financially. You might have options you didn’t know about.
Based on your finances and preferences, you can pursue buying and selling in three different ways;
Option 1: Buy your new home first. If you have enough cash for a down payment and can meet the criteria for a new loan while keeping your existing one, it might make sense to buy a new home before listing your current one. This gives you more time to find exactly what you want, which is helpful if you have very specific needs or preferences, or simply don’t want to feel rushed. However, keep in mind that you’ll be paying two mortgages until you can sell.
Option 2: Sell your current home first. If you need the cash from the sale of your existing home, consider listing it before searching for a new property. While you won’t be under as much pressure to accept an offer, you won’t have as much time to find a new home. This might be OK if you’re flexible, or know there’s a good supply of the kind of house you want. You can also make your purchase offer contingent on selling your home or arrange a rent-back from the buyer.
Option 3: Find short-term housing. If you don’t want to feel rushed on either side of the transaction, or if the market is particularly tight, consider selling your home and moving into a rental. This frees up cash and gives you plenty of time to find a new home. This plan involves a lot of moving, so just make sure you’re up for the challenge!
The Home Buying Process
If you’ve purchased a home recently, this process should look pretty familiar. Or maybe it’s been a while and you could use a refresher. Either way, we’ve found that the home buying process goes much smoother if you know what to expect. Here are the key steps you’ll take when buying your next home.
Step 1: Pre-qualification
Simply talk to one of our Mortgage Loan Officers or apply online to decide which loan is best for your needs. We’ll provide a range of options based on your income, how much you owe, and any goals you’d like to meet. You will walk out of the door with a pre-qualification for your loan. You can also pre-qualify yourself online, for free. Just fill in the type of loan you want, the purchase price and down payment, your monthly income and debt, and the balance on all of your credit cards. You’ll see an estimated interest rate, monthly payment, and other details.*
Here is the information you should bring to the appointment or have on hand when pre-qualifying online:
- Your current address and any other addresses for the past two years.
- Driver’s license
- Two months of bank statements
- Social Security numbers for all borrowers.
- Your employment history for the past two years.
- Most recent 30 days of paystubs and last two years’ tax returns, both personal and business.
- Information about your current debts.
- A copy of your current mortgage statement if held by another lender.
*Legally subject to underwriting the home you are refinancing and verification of the information you’ve provided us on your application.
If you’re selling a home at the same time, consider how much equity you have in your current home, how much of that balance will go toward your next down payment, and whether it makes sense to keep any cash for other purposes.
Consider pre-qualifying before talking to a real estate agent, so you both have a good idea of the price range you can afford.
Step 2: Making an offer
When you find a home that feels right, your agent will help you make an offer in writing and submit it to the sellers. You’ll include earnest money, a fixed amount that shows your offer was made “in earnest.” Earnest money is kept in escrow until closing and is usually counted as a credit toward your closing costs.
In most cases, the seller has 24 to 48 hours to consider your offer or propose a change with a counter offer. If you have an agent, he or she will negotiate the offer and create documents on your behalf.
If you’re selling at the same time, consider making your offer contingent on the sale of your current home. However, this might not work in a competitive market. Instead, you may be able to negotiate a rent-back, which allows you to rent your current home from the new owner for a period of time.
Step 3: Processing your loan
Once your offer has been accepted, we’ll request documentation to verify your assets and income. In addition, we’ll order an appraisal from a third party, title report, and flood certification for the home. You will pay a processing deposit for these services, which will be applied toward your closing costs. We’ll also set up escrow for the loan closing and send you disclosures to read.
Your agent will likely advise you to make your offer “contingent on inspection.” This means your offer isn’t valid until the home has been carefully examined by a qualified home inspector. Your inspector will check out the property from top to bottom, including its foundation, plumbing, electrical systems, and roof. If issues arise, your agent may negotiate for repairs, an adjustment in the sales price, or cash back at closing.
Step 4: Underwriting
We’ll prepare a closing disclosure which summarizes the final numbers for the agreement, as well as confirm your financial situation and property align with federal mortgage guidelines. Regulations that protect consumers require a three day wait before the documents can be signed to allow you time to consider and review the terms of your loan.
Step 5: Closing
We’ll prepare the loan documents and send them to an escrow company. You’ll make an appointment with the escrow company to sign the paperwork at their office. Once we’ve received the signed documents, we’ll transfer the money to the escrow company, which will disburse the funds and record all documents.
What happens next?
Have questions about payments, taxes, insurance, auto payments or anything else? Our Contact Center will be able to help. Get in touch with our Contact Center.
Terms To Know
- Adjustable-rate mortgage (ARM): A kind of home loan where your interest rate is tied to a market index. As the index goes up or down, your interest rate and payments will also change at each scheduled adjustment period. These loans generally start out with an interest rate lower than a fixed-rate loan. This saves money initially and may help you qualify for a larger loan.
- Amortization: Gradually paying of a debt by making regular payments over a period of time.
- Annual percentage rate (APR): A measure of both the interest charged as well as any other costs associated with the loan. APR is designed to show you the total cost of the loan, which is important when comparing loans and evaluating if a loan is right for you.
- Buyer’s agent: A real estate professional who represents the buyer in a purchase of a home. Typically, there is no cost in working with a buyer’s agent because commission is paid by the seller when the house is sold. Be sure to discuss any compensation before you start looking at homes with your buyer’s agent.
- Closing costs: Fees paid to the financial institution or third parties for services to process the application and for the closing process.
- Collateral: Something of value used to secure a loan. For a mortgage loan, the home serves as the collateral. The property becomes the property of the financial institution if you are unable to pay your loan.
- Construction draw period: The period during construction in which funds can be drawn to pay the builder.
Construction permanent loan: A single loan that covers financing during the construction phase, as well as your permanent mortgage loan.
- Credit rating: A score given by a credit bureau that helps the financial institution determine your ability to repay a loan. Factors include your history of paying your bills, outstanding debt, credit history, variety of credit and history of application for credit.
- Default: When a borrower is unable to make payments on a loan or fails to meet requirements of the terms of the loan.
- Discount points: An upfront fee that lowers your interest rate.
- Down payment: The amount of the purchase price of your home that you pay in cash up front.
- Equity: The difference between the market value of a property and the owner’s outstanding mortgage balance.
- Escrow: A neutral third party that holds the money until all terms of the agreement has been met.
- Earnest money: A deposit you give to the seller when submitting an offer to show serious intent about buying a property.
- Fixed-rate mortgage: Type of home loan where interest rate remains the same for the length of the loan.
- Home inspection: Visual examination by a certified third party to provide an accurate estimate of the home’s value and condition.
- Homeowners’ insurance: Insurance that protects your property against loss from theft, liability or other disasters. Typically it is required for an amount equal to the mortgage loan.
- Interest rate: Percentage you pay for the loan to the lender.
- Jumbo loan: Loans that are more than the limits set by the Federal National Mortgage Association or Federal Home Loan Mortgage Corporation guidelines.
- Loan origination fee: A fee paid to a lender for processing a loan application. This is shown as a percentage of the mortgage amount and is due at closing.
- Monthly payment: The amount you pay for your loan (principal and interest) each month.
- Mortgage loan officer: Employee who serves as your guide through the process and who helps you select the loan that meets your needs.
- Private Mortgage Insurance (PMI): Insurance that protects the lender if a borrower defaults. Usually required if the down payment is less than 20 percent of the purchase price.
- Permanent mortgage loan: The loan that is finalized at the completion of construction. It includes regular monthly payments of both principal and interest.
- Rate lock: Guarantee of a interest rate for a defined period of time.
- Real estate agent: A person authorized to act on your behalf when purchasing a home.
- Rent-back: An agreement that allows you to rent your current home back from the new owner for a period of time.
- Seller’s agent (Listing Agent): Real estate professional that represents the seller. You generally won’t work with the seller’s agent, as the buyer’s agent will coordinate on your behalf.