THE PEOPLE YOU WILL MEET DURING YOUR HOME PURCHASE
If you are in the market to buy a home you will be interacting with many different people in different companies. It would be nice if the home purchase was a one stop experience but at least for now, there's lots of folks involved.
Let's start at the beginning with finding out how much you can afford by meeting with a lender.
The Loan Officer or Mortgage BrokerMost people like applying for a loan about as much as going to the Dentist. Well maybe a little bit less. But it's painless in most instances and you don't even need a shot to get numbed. Thinking of how much you will spend can do it! So unless you are one of the fortunate few "all cash" Buyers, this is the first step.
There's really three different kinds of lenders you can use:
- Mortgage Bankers
- Mortgage Brokers
When I refer to banks think of the big ones such as Wells Fargo, Bank of America, Chase, etc. Often the big banks may have very aggressive rates (even more so if you have a wealth management account or other relationship) but they are the least flexible in regards to their overlays to the Fannie Mae guidelines. And often their processing is, how do I put this gently, somewhat bureaucratic.
Next up are the Mortgage Bankers. These are also what are considered "direct lenders" and they are banks although not in the traditional sense meaning no checking accounts, branches, etc. They are solely in the business of originating loans.
Lastly there's the "Mortgage Brokers" and as the name implies they broker loans to direct lenders, usually the big banks. So, why would someone go, for example, to a mortgage broker who then sells the loan to a bank? Great question. Often the wholesale side of the business may have looser qualifying standards than the retail division because they do not want to be on the hook to buy back the loan if there is an audit issue. Which brings us to......
The Processor, Underwriter, and FunderWell chances are you will never meet the underwriter and funder but you will most likely be interacting with the processor. A lot. And you will hear about the underwriter.
After you loan officer takes your application and qualifies you, the processor works to gather up lots of supporting documentation and submit it to the underwriter. Some companies submit items as they come in and other wait until the file is complete. The underwriter is the final decider on all supporting documentation and the one verifying the file meets all the loan origination requirements. And most important, the funder or closer who is the person who hits send so the lender's money goes to escrow to fund your loan.
The Escrow CompanyOnce your offer is accepted, escrow is opened and get to deal with the escrow company and all that entails. Truthfully, the best escrow companies can make the process very pleasant. Others can be frustrating to work with.
In Redondo Beach, the standard practice is that the Seller (most likely their agent) chooses the escrow company. The good news is that since the Seller is also paying escrow fees, you can assume they did some price comparison. And if they followed their agent's advice, they will go with one of the reliable established shops.
Often at the busier escrow companies you may interface more with the escrow officer's assistant than anyone else. These days, you are just as likely to sign your loan docs with a mobile notary as at the escrow office so if it is not in a convenient location, don't worry.
So What Does Escrow Do Anyway?
The escrow holder, in most cases in Redondo Beach an escrow company, makes sure that all the documents flow between the parties and that most importantly the funds are properly disbursed and the deed is prepared correctly and recorded by the title company. In other parts of CA and sometimes in LA County, the title company also is the escrow holder. Either way think of escrow as a "neutral third party" that makes sure that certain and specific clauses of the purchase contract are performed.
And on a related note.......
What is a Title Company?
In order to insure that the no one else claims to own the home you've just purchased, as a Buyer you need Title Insurance. Typically, the Seller pays for the Buyer's Title Insurance and the Buyer pays the lender part. While your agent may (or may not) interface with the "Title Rep", most likely you will not unless their are specific questions on what is called the Title Prelim that you need answered.
What's the Difference Between a Home Inspector and Appraiser?
Great question and I'm glad you asked.
In order to secure the collateral for your loan, the bank will order an appraisal of the property you are buying. The appraisal is considered an "opinion of value" and is not an absolute in black and white terms. Two different appraisers may come up with different values. And if you are getting a great deal on a property it is highly likely that the appraiser may only indicate the sales price on the appraisal form.
On VA and FHA loans the appraiser is more likely to look at the property condition as well for health and safety issues but on any loan an appraiser can flag or call out property conditions that don't meet minimum standards of habitability. But the appraiser is doing a site visit to assess the value.
It is not likely that as a buyer you will meet the appraiser. Often the listing agent will meet the appraiser and on some instances your agent might but I can not think of any instances that come to mind when my Buyer clients met the appraiser. As the appraiser issues a written report after the fact and does not comment on the value at the time of the site visit, there's also no reason for the Buyer(s) to be there.
The General Home Inspector
Think of the general home inspector as your general family Doctor - the one you see before you go to the specialists.
The general inspector will do a visual inspection and focus on major and minor items such as the roof, electrical, heating, plumbing, foundation, etc. Based on what they find you ma have to call other inspectors such as sewer line, roof, mold, termite, chimney and more. In some areas of LA we will also do a geological study but not that common in Redondo Beach. The home inspector will provide a written report.
Real Estate Agents
You will meet many of these characters during your home search. Maybe even yours truly.
The best advice I can give you about agents is that a) as a Buyer you really need your own representation (the listing agent is not the best choice), and b) there is a difference in agents.
You should meet a few Realtors who specialize in the neighborhood, price range and kind of property you are interested in purchasing. Experience counts but so does how many homes someone has sold over the years. An agent may have been licensed for 15 years but only has sold 3 properties a year.
Active agents like me do over 20 transactions a year. The more homes you sell and the longer you've been doing most likely the more you know.
And fortunately you can read online reviews. Here's a link to mine.
If you have any questions about the home buying process feel free to call, text or just email me.
|Ellis Posner Sells Redondo Beach Real Estate|