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First Step- Get Pre Approved
FYI Keep in mind that this step is not necessary if you’re buying with cash. It is key to locate a well-known mortgage banker with a good reputation to get pre-approved. We have a few preferred lenders that we can recommend. It is crucial to avoid making any unusual deposits or debits from any of your accounts during the mortgage approval process and avoid any large purchases on credit. These things can lead the lender to delay or decline your application and lead to a host of other issues that you would much rather avoid. To get pre-approved you will need at least 2 pay stubs, 2 bank statements & 2 years worth of tax returns and running a credit report.
Second Step – Initiate that Contract
Now it’s time to get the contract in motion. Remember that it is very important to include an inspection contingency as well as a financing contingency (if applicable) in your contract offer. It is in your best interest to advise your lender that you aim to close by the financing contingency deadline, this will save you a lot of time and energy. Inspections will take on average 10 days while financing contingency 45 days. The closing period is 45 – 60 days if financing or 20-30 days if cash.
Third Step – The Questionnaire
Perhaps the Holy Grail that is required by lenders to assess the financial and legal standing of any condominium project, the questionnaire is a must when entering a new contract whether you’re financing or not. There are two types of condo questionnaires that you can ask from your lender. The first is known as a full review condo questionnaire and the other is a limited review condo questionnaire. It is important to understand your lender needs to approve both the buyer and building in tandem. 25% down payment is the threshold which will determine what form of the questionnaire you should order. Full review questionnaires are for <25% down payments and limited review is reserved for >25% down payments.
Fourth Step – Appraisal
Updating your mortgage banker with the required paperwork is vital to avoid another review of your file, which can increase the chances of even more stipulations and requested documentation. After your appraisal arrives at or above the contract price you should begin applying to the condo association which will take 7 days. This time period can possibly collide with the timing for the appraisal.
Fifth Step – Go Over Those Financials
Now it’s time to review your latest end of the year financial statements, budget of the building, and rules. If you find yourself conflicted over anything during the reviewal process you are entitled up to 3 days to look over and cancel, enabling you to avoid tricky rental restrictions that can come up out of the blue. But the most important thing to review is the budget which needs to have at least 10% in a reserve account for you to get adequate financing, local portfolio loans can be an alternative.
Sixth Step – Title Search
In this step it’s important to locate a well-known and local title firm or a reputable attorney to conduct a title search and a municipal lien search while making sure the annual real estate taxes are recent. Keep in mind that the title company needs to order the estoppel letter from the association on time to avoid delay. If you aim to use the seller’s title company an attorney should definitely review the title commitment and the transfer documents to make sure everything is in order.
Seventh Step – Look the Property Over
This is an important step that some people do not perform but is essential to make sure the property is in order. From creepy critters to damages things can happen and it is crucial that everything is in check before you make your investment. Issues like these are not immune to any property and that is why the final check must be carried out.
Eighth Step – The Closing Disclosure or HUD-1
The Closing Disclosure or HUD-1 needs to be gone over as quickly as possible and you have a 3 day waiting period between receipt of the Closing Disclosure and the actual closing. The speed of your closing is contingent on you completing the reviewal of this document.
Ninth Step – Closing Time
Congrats, it’s now time for closing. You will need to forms of ID and your association approval along with the ALTA Master Settlement Statement. This statement will stand as proof of purchase until the deed gets recorded and mailed to you with your title insurance policy.
Tenth Step – Tax Deductible and Homestead Exemption
The final step, this is it folks. It’s now time to go over your tax-deductible expenses with your accountant. If your property is going to be your primary residence make sure you apply for the Homestead Exemption. The Homestead Exemption savings are transferable from previously sold homes making the process more convenient for experienced home-owners.