Steps to Home OwnershipJoe SotoUnion Bank, N.A. Vice PresidentBuying a home may be the biggest investment you’ll make in your lifetime, and the process can be exciting. For many, it can also be intimidating, but understanding the steps to achieving your goal of home ownership can help you stay on track and improve your buying experience. Following are a few suggestions to help you on the road to home ownership:Get Your Finances in OrderObtain copies of your credit report and have any errors corrected before you apply for a loan. Pay down/off outstanding balances where feasible as doing so will help improve your debt-to-income ratio and your credit score. Organize important documents that you will need, such as current pay stubs, W-2 forms, bank and asset statements, tax returns and accurate records of debts. Save for a Down Payment and Closing CostsThe amount you will need for a down payment depends on your lender, but the more money you are able to put toward your down payment, the more equity you will have in your home and the lower your mortgage payments will be. If you have less than 20 percent to put down, you'll probably have to pay for mortgage insurance, which protects the bank against default. You will also need to have cash for closing costs, which are generally equal to about two to six percent of the purchase price of the home. Shop for a MortgageLearn about different terms and rates available, as well as any loan programs that might be available to you as a homebuyer. Many banks offer special mortgage programs that may be suitable for you. A trusted lender can estimate how much you can truly afford to pay for a mortgage and offer insight to what type of mortgage is best suited for you. Lenders can also help you get pre-approved for a loan, which establishes your buying power giving you more leverage in the deal-making process.Find a Real Estate AgentFind a licensed realtor you trust who is familiar with the area in which you want to buy. A realtor’s experience buying and selling homes can be very valuable, and their services generally go far beyond helping you find a home in your desired location, as they can also negotiate price and other criteria and walk you through the paperwork. Make an OfferOnce you find a home that meets your price range and criteria, you may be ready to make an offer. The three basic components of a purchase offer are price, terms and contingencies. Price is the dollar amount of the offer, terms cover the other financial and timing factors that will be included in the offer, and contingencies are clauses that specify what will need to take place in order for you to fulfill the contract. The seller will either accept your offer, counter-bid, or decline your offer. If you and the seller are able to come to an agreement, you’ll be asked to sign a contract and put down a “binder” or “earnest money." Have the Home Professionally InspectedHire a home inspector, preferably an engineer familiar with the area where you are buying, to take a close look at the condition of the home. An inspection can point out potential problems that could require costly repairs down the road. In addition to the general home inspection, it may also be prudent to have specialists inspect various areas of the home, such as the roof, electrical, plumbing, chimney, etc. Close the SaleConfirm with your real estate agent, home insurance agent, and lender that you have all the proper documents in place before signing the closing papers. At this time, you’ll usually need to settle all closing costs before receiving the keys to your new home. The foregoing article is intended to provide general information about steps to purchasing a home and is not considered financial or tax advice from Union Bank. Please consult your financial advisor.
Joe Soto is a vice president and community lending sales manager for Union Bank, N.A. Union Bank, N.A., is a full-service commercial bank providing an array of financial services to individuals, small businesses, middle-market companies, and major corporations. The bank operated 414 branches in California, Washington, Oregon, Texas and New York, as well as two international offices, on December 31, 2011. UnionBanCal Corporation is a wholly-owned subsidiary of The Bank of Tokyo-Mitsubishi UFJ, Ltd., which is a subsidiary of Mitsubishi UFJ Financial Group, Inc. Union Bank is a proud member of the Mitsubishi UFJ Financial Group (MUFG, NYSE:MTU), one of the world’s largest financial organizations. Visit www.unionbank.com for more information.