It is important that the first step in the process is to get pre-approved by Capitol Bank. This is helpful so you know what you can afford before looking at homes. Buyers in the greater Madison area like to see the pre-approval letter submitted with your offer. This shows them that you are a serious buyer and are ready to buy.
Capitol Bank has an easy pre approval application right on our website. Once the application is received by a lender at Capitol Bank we can let you know what documents pertain to your situation. Once we receive these documents, we can provide you with a pre-approval letter normally within 24 hours.
The following is an idea of the documents that may be needed:
- Pay stubs covering the most recent 1-month period showing year to date earnings
- W-2’s for the past 2 years
- Bank statements covering the most recent 2 months (checking, savings, retirement, etc)
- Federal tax returns for the past 2 years if you are self-employed
- Corporate tax returns and K-1’s if you are more than 25% owner in any entity
Find A Home
The next step is to find your new home based on the parameters you discussed with your lender. Your Realtor will help you navigate this process and help you find the home that best fits your needs. He or she will guide you through the process of putting in an offer on a home and negotiating that offer.
Once you have an accepted offer, it is important to get it to your lender right away. There is normally a financing contingency in the offer. This means that there is a specific date prior to closing in which the financing has to be all lined up and approved by Capitol Bank. Time is of the essence at this point. Items that you provided at the time of application may need to be updated, so make sure you respond to your lender’s request. The lender will order an appraisal and make sure all other documentation is in order.
It is important after the offer is accepted that you don’t incur any other debt or change jobs without discussing with your lender first. Everything is based on how the application was originally submitted, so any changes at this time could jeopardize the loan approval.
At this time you will get disclosures to be signed from your lender and get your estimate of closing costs. The lender can now have a discussion based on closing date, down payment, closing costs, and a good estimate of what you will need for closing.
Locking In A Rate
After the offer is accepted you will have a conversation about current programs and rates. Rate locks are time sensitive also. The closing will need to occur prior to the rate lock expiring.
Other “To Do” Items
This is a good time to be checking into homeowners insurance for your new home. A paid receipt for one year’s premium and a binder will be required prior to your closing.
After the appraisal is received and all other documentation is reviewed, an approval for financing can be issued. This is called a commitment letter. We will ask you as the borrower to sign off on the commitment letter and then it will be sent to your Realtor to give to the seller. This lets your seller know that you are approved for your loan.
The final step is the mortgage closing. Normally the closing occurs at a local title company. Most of the time the Realtors, sellers, buyers, and lender attend the closing. At this point you will sign all of your loan documents plus some documents which are required by the title company. Normally about 3 days prior to the closing date your lender will review closing costs and the down payment to let you know what you need for the closing. The check for closing will need to be in the form of a cashier’s check made out to the title company. In addition to the cashier’s check you will also need to take a valid driver’s license to the closing.
You will receive copies of all the documents signed at the closing. If the seller is at the closing, there is usually time to talk to the seller about detailed information such as garbage day.
Keys are handed over and you now own your new home!