It is essential that you build a strong relationship with your lender in order to help your process go smoother and be more enjoyable. At Glenwood State Bank we care about our customers and continue to look for ways to make your loan process go as efficiently as possible and help find a solution that best fits your needs.
The pre-approval process is fairly simple.
Fill out a loan application along with some information about your income and assets.
We will review your application, calculate your debt-to-income ratio and your credit score.
After reviewed, we will send you an offer for how much you can borrow.
We provide a letter for your realtor to show that you’ve been approved up to a certain amount.
This step is also important to your home purchasing process. It is essential to have trust in your realtor. They are there to help you as much as they can, so use them. At Glenwood State Bank, our realtors will help you find the best house to fit your needs. Our realtors have many years of experience and are very knowledgeable. Come meet our realtors at Glenwood State Bank and you’ll be home in no time! We will also work with your realtor of choice.
Make an offer on a home
You have found a house that fits your needs within your budget. It’s time to make an offer.
Send your offer to the seller.
Wait for the seller to review the offer and either counter offer or accept your offer.
If a counter offer is made, the buyers will either accept or make another counter offer.
Offers can also include a contingencies- Two common contingencies includeed in an offer are a passed home inspection and an acceptable appraisal contingency. This process will continue until you and the seller come to an agreement or you will decline and continue your search.
After you come to an agreement with the seller and accept an offer, you will then apply for a mortgage loan. When applying for a loan we will need further documentation in order to take a deeper look at your financials to determine your interest rate and if you are approved for the offer amount.
Here is a Checklist of items you will need in order to complete this process.
If you're self-employed, you'll need a recent profit and loss statement.
The approval process at Glenwood Sate Bank is quick. We confirm that we got your mortgage loan application within 24 hours. Once we have everything we need, the loan approval on an in-house loan lasts about 1 to 3 business days and 3 to 5 business days for a secondary market loan. Keep in mind, after you are approved, the rest of the process can take up to 30 or more days.
Types of Mortgages
There are many different types of home loans. It is important to find a loan that will best fit your needs and offers the best interest rate. The first thing we consider is the term of your loan. Most loans are either a 15 or 30 year term. A 15 year loan has a shorter life span with a higher monthly payment and a lower interest rate. A 30 year loan has a longer life span with lower monthly payments and higher interest rates. Keep in mind though, the longer the life span of the loan, the more interest you will end up paying. At Glenwood State Bank, we offer several different loan options to fit your unique needs, including fixed rate, variable rate, short term balloon loans, VA, FHA and more.
Understanding your Interest Rate
When buying a home, the interest rate is important because it determines how much your loan will cost over time. Rates change daily, until you lock in your rate. Once you lock your rate, depending on the term of your lock, we will continue to underwrite your loan and collect items needed to clear your file. It's important to provide the information requested timely so your lock doesn't expire. If your lock expires, you may be subject to a higher rate (current market rate) or you may have to pay an extension fee.
Your lender will provide you with a loan estimate that includes the details of your loan term and fees. This includes what your interest rate will be. Rates are typically determined by your credit score. With a good credit score, you will usually get a lower interest rate. With a poor credit score, you will most likely get a higher interest rate.
If your loan is not approved there are a few reasons why this might be.
Your credit score might be too low.
Your debt-to-income ratio may be too high.
Don’t be discouraged though, there are still things you can do in order to get a loan. You could:
Apply for an adjustable rate mortgage or another type of loan. (VA, FHA, etc.)
Find a house that is less expensive that doesn’t require as big of a loan.
Put more money into the down payment of the house.
Consolidate debt or pay off other monthly obligations to qualify for more housing payment.
A home inspection is very important. This will guarantee there are no hidden issues with the house before you begin your investment. Our realtors at GSB have a list of local inspectors that you can trust.
With a regular home inspection, these are the things they will check:
- Heating and air system
- Wiring and the plumbing
- Basement and the attic for mildew and draining problems
It is important to keep in mind that home inspections are non-invasive so the inspectors will check only what they can see. Based on the inspection there are a few things you can do if the inspector presents problems with the house. You can either.
Ask sellers to pay for repairs.
Ask for a credit and pay for the fixes after closing.
Purchase the house as-is and take on the issues yourself.
Keep in mind, some types of loans (FHA, VA, RD loans), have strict rules on inspections that could put your loan in jeopardy if there are issues with the home that aren’t fixed prior to closing.
If your desired home is in city limits and is connected to city utilities, a regular home inspection is sufficient. However, if your desired home doesn’t have city utilities it’s typically required to get a separate sewer and well inspection to insure your house doesn’t have issues in those areas. Another thing that is of concern in our area is radon. We recommend getting a radon inspection. If your radon levels are high, the cost of installing a radon removal device is another thing you may be able to negotiate in the housing agreement.
At this time, we will schedule an appraisal on the property for you. An appraisal is a professional estimate of how much the home you want to buy is worth. The appraiser will look at the inside and outside of the house and determine the condition of:
They also consider:
Age of house
View from the house
Value of neighboring homes
After reviewing all the features of the house the appraiser will create an appraisal report which is a summary of the house’s value and determines how much money your lender will give you for the house.
If the appraisal is higher than the sale price this means the house is worth more than what you’re paying. If it is lower than the sale price you can ask them to adjust their price to fit the appraisal or you can pay the difference out of pocket, or you can walk away from the home and continue your search.
The next step is homeowners insurance. In the state of Minnesota, it is not required to have homeowners insurance. However, if you have a mortgage, lenders will require you to have homeowners insurance. Lenders require you to have enough coverage to cover the cost of your entire house and furnishings in case something awful happens. Your policy should cover fire, accidents, theft, wind damage and other natural disasters. We have insurance at Glenwood State Agency and will work closely with you to come up with the best plan to fit your needs. We also will work with your insurance company of choice.
It is now time to close on your new house! You will need to meet with a title company in order to sign all the final paper work as well as paying your closing costs. Closing costs are paid with a cashier’s check. The next step is disbursement. The lender will then send the loan funds to your escrow company where the funds are divvied up to all persons involved. These may include- the bank that previously held the mortgage on the home, the sellers, the agents on both sides, and the escrow company.
Now, the fun part. Moving into your new home! This is the most exciting and interesting part of the entire process.