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Acceptance Capital Mortgage Corporation
Home Purchase Loan
When buying a home, the first important factor is finding out how much you can afford.

This will depend on your income, credit score, current monthly expenses, down payment amount, and your interest rate. It’s important to set a price range based on your specific budget. Lenders use gross income (before taxes) to determine how much they will approve you for. They may approve you for more than you are comfortable with so be prudent.

Be sure to speak with a lender and get fully pre-approved before you start home shopping.

Getting a good idea of your new mortgage payment will help you to figure out your costs and establish a reasonable price range with your realtor. This will save you time when shopping. Most sellers want to see a pre-approval letter that outlines how much you qualify for before they will enter into a contract. Make this your first step and you’ll be better prepared to negotiate. Shop around before choosing a lender and make sure that you’re comfortable with whomever you choose to work with.

The next step is to shop for a home.

It’s a good idea to make a wish list before you begin your search. This will help to keep you focused and give your realtor a good guideline to work with. You can get a lot done by shopping on-line. Don’t assume that your realtor will do all the work to find your new house. You should work as a team and send them information on properties that you find as well. This will help them to zero in on what you want and it could mean the difference between getting your dream home under contract or being a day late to the negotiation table.

Once you’ve chosen your home, you’ll negotiate a contract with your realtor to purchase the house.

You cannot apply for a mortgage until you have a binding contract to purchase a home. A binding contract is one that has been executed (signed) by all parties. You’ll also need to provide earnest money in order to establish a legally binding contract. The earnest money or deposit is refundable until the due diligence period ends. Once under contract your due diligence period starts. A due diligence period is commonly set at 7 to 14 days. This time frame allows you to have the home inspected and get your financing in order. Information on the home inspection can be used to renegotiate or terminate the contract if necessary.

After the due diligence period is completed, your lender will order an appraisal of the property to determine the value of the property.

You have a legal right to get a copy of this document and you will want to keep it for your records. The loan given by your lender is based on the lower of two numbers: 1. The appraised value and 2. The contract sales price of the home. If the appraisal comes back lower than the price you’ve agreed to pay for the house, then you have grounds to renegotiate the sales price. It is important to make sure that the contract has an appraisal contingency written in. This contingency should be enforced longer than the due diligence period as it can take up to two weeks to get an appraisal report.

Next, you will need to purchase homeowner’s insurance.

It is a good idea to shop around and compare different policies. There are a few helpful factors to consider, such as, a higher deductible. Increasing your deductible by just a few hundred dollars can make a big difference in your premium. Additionally, you may be able to get a lower premium if your home has safety features such as, dead-bolt locks, smoke detectors, an alarm system, or storm shutters. Finally, always make sure that you purchase enough coverage to replace what is insured. Replacement coverage gives you money to rebuild your home and replace its contents. Whereas an Actual Cash Value policy is cheaper but only pays what your property is worth at the time of loss.

Once you’ve got insurance in place, your lender will notify you of final loan approval and schedule the closing.

Once loan approval is finalized you’ll want to contact your realtor to schedule a final walk through at the house. A final walk through helps you make sure that the condition of the property is the same as it was when it was inspected.

The last step is going to your closing.

The closing is where ownership of the home is legally transferred to you and the new mortgage is affixed to the house. You’ll be signing a lot of paperwork and your seller will also be present. A closing attorney or title company will supervise the closing to be sure that all parties receive the right amount of funds and that pro-ration of taxes is handled accurately. Your lender will instruct you on how to provide your funds at closing. You may wire funds for the closing or in some cases you may provide a certified check. Personal checks may not be used at a loan closing.