Buying a home under normal circumstances can be quite stressful, but trying to purchase one during a pandemic offers unique challenges—yet it’s being done every day. Surprisingly, the overall process remains unchanged—with some additional requirements and steps to ensure that everyone remains safe.
Step 1 - Find your loan
Before you begin shopping for your home, you need to determine how much home you can afford. When you apply for a home loan, your lender will answer this question for you. Begin by organizing some basic information and documents, such as your pay stubs, bank account statements, and tax returns if you’re self-employed.
In addition to loan closing costs, the down payment is probably the biggest hurdle for many first-time home buyers. When calculating your assets, include all of your checking and savings accounts, investments, retirement accounts and gifts from family.
Applying for your loan can be done safely online, and you’ll communicate with your Loan Officer and Processor by email and phone. All documents can be e-signed, and the final documents (which must be notarized) can even be signed outdoors with a licensed and masked professional.
Step 2 - Get pre-approved
A pre-qualification letter is NOT the same as a pre-approval. Pre-qualified just means you spoke to a lender who pulled credit but did not verify your work history, income or bank statements. The pre-approval letter will show the maximum loan amount you qualify for, so you know how much you can afford.
When you find your dream home, you can present the seller with your pre-approval letter, showing them that you’re serious about buying their house. A pre-approval is good for 120 days.
Step 3 - Find your home
Where you live influences every aspect of your daily life. Take your time and think about schools, shopping, traffic, proximity to work, restaurants, etc. You can search for homes online at real estate sites like realtor.com and Zillow.com, and work with a qualified real estate agent.
Many of the available homes today offer virtual tours, and you can still make scheduled in-person visits in spite of the pandemic. You will need to wear a mask, sanitize before entering and do not use the bathroom. You can even find open houses, with limits on the number of people who can enter the home.
Step 4 - Make your offer
You’ve found a house that you love, but it’s not yours yet. First you have to make an offer, in writing, and submit it to the sellers. This is usually done through your real estate agent and is accompanied by your earnest money deposit, which is a predetermined amount of money to show that your offer is sincere.
The seller usually has 24 to 48 hours to consider your offer or make a counter offer, which means that they want to sell you their house, but they want a change to the original terms of your offer.
Step 5 – Engage your Lender
Once your offer is accepted, reach out to your loan officer with a copy of the contract. The lender will take care of all the paperwork. They’ll help open escrow, order the title and appraisal and follow up to make sure you meet all of your contingencies and close of escrow date. Purchase loans can close as quickly as 30 days.
Step 6 - Close the deal
A representative of the escrow company will work with you to ensure safety for everyone involved, and they’ll manage all the final paperwork for the loan and real estate transaction. Once the title is recorded, ownership will transfer to you.
Stanford Federal Credit Union is a full-service financial institution serving the Bay Area.
