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5th Step in Buying a Home – Loan Approval and Closing

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Have you:

Whew…you’re almost to the finish line. Now that you have a contract, the only thing left besides the packing and unpacking is to get approved on a loan and attend the closing.

Once you have an accepted contract it is time to contact your mortgage loan officer (the one you worked with when you were pre-approved) and start the process for loan approval.  Your contract should allow for at least 30-45 days for you to get loan approval and close on your new home.

fixed or variable rate Settlement Cost Booklet HUD-1 Settlement Statement Image Map
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4th step to buying a home: searching & making an offer

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Have you:

Good! Then it’s time to start house hunting. As a mortgage loan officer for the last 10 years, I certainly have a lot of knowledge in real estate, but still always refer to experienced realtors for this next step. Their knowledge of the housing market, along with expertise in real estate contracts, are the key to making the best selection of the property in which you could spend at least 5 years (but for some of you, potentially the rest of your life). I referred to Anita Trozzolo, a Kansas City realtor to give us some guidance for this next step.


Create a priority list

You are making perhaps the biggest purchase of your life, and you deserve to have that purchase fit both your wants and needs.

Your priority list should include the basics, such as:

  • neighborhood and size
  • number of bedrooms and bathrooms
  • basement (finished or unfinished)
  • a kitchen that comes with appliances

If you can’t get a home at your price with all the features you want, then what features are most important?  Start prioritizing.  For instance, would you trade fewer bedrooms for a finished basement?  A longer commute for a larger home and lower cost?

What type of home best suits your needs?

You have several options when purchasing a home from a traditional single-family home, duplex, townhouse or condo.  Each option has its pros and cons, depending on your wants and needs, so you need to decide which type of property is best for you. You can also save on the purchase price in any category by choosing a fixer-upper. Keep in mind, though, the amount of time and money involved to turn a fixer-upper into your dream home might be much more than you expected.

Regardless of your choice, it’s important to target your search. By using options such as general location and affordability, you can refine your search and focus on homes that offer the most desirable features. However, based on my experience with the hundreds of first time home buyers for whom I successfully found and negotiated their first home, it is imperative to nail down location first.  The majority of buyers purchase homes from their choices in their most desired location.

Here are some more tips for your search:

  • Make sure your realtor understands your wants and needs.
  • Your agent must be patient, and show you as many homes as you would like to see. This is most likely the largest purchase of your life!
  • Have your agent set you up on an automatic home search program. This is an efficient way to guide you in your search.
  • Drive through neighborhoods on your off time to check out the area.
  • Choose your favorites before submitting an offer, and tour as many times as you feel comfortable.  Oh, and don’t forget to bring parents and friends. The more eyes the better!

Submit an offer, and most importantly understand the sales contract.  Your agent will assist you with the following:

  • To determine how much to offer, your realtor will show you a market analysis of all the recent sold properties comparable to the home or homes you’re interested in.
  • Obtain all material defects known from the seller through the seller’s agent.  
  • Discuss types of insurance that is required.
  • Counsel you on what price to offer the seller.
  • Make sure closing costs are explained and negotiated.
  • Make sure home warranty is explained and negotiated.
  • Explain the sales contract and all other forms associated with the contract.
  • Present your offer to the seller.
  • Negotiate your offer and counteroffers.
  • Set up inspections.
  • Provide the contract to the lender and closing company.
  • Stay in constant communication with the lender.
  • Arrange and attend the closing.
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When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.

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3rd step to buying a home: finding the right realtor

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Who better to continue our journey of Steps to Buying a Home than our associates, Natalie Crumpton and Josh Cummings, UMB Unit Finance Managers, whose expert realtor guided them while on HGTV’s House Hunters‡? 

Natalie shares their story along with advice for finding the right real estate agent.


Last summer we spent a lot of time looking at potential new homes online. At the time, we were living in a one bedroom condo in downtown Kansas City and were both ready to transition into something a little bigger we could call home. We began by searching different real estate databases, slowly narrowing homes down by the must-haves on our list: an open kitchen, a band room for Josh’s drums, a deck for entertaining and a spacious backyard for our new puppy.

Once we established our budget and wish list, we reached out to our realtor, Monte, who had been Josh’s real estate agent a few years ago and helped him to pick out the one bedroom condo we were living in at the time. What we loved about Monte (and still do) was how committed he was to making sure we found the right home (in the right location, for the right price) that suited both of our needs. He was patient, flexible with our schedules and always willing to go the extra mile as our realtor. So it came as no surprise when he was more than willing to accommodate another one of our requests: to let a camera crew follow us around and document our journey for national TV.

House Hunters

Here’s how it happened: It became somewhat of a tradition to turn on HGTV on Saturday mornings and watch House Hunters while we were searching for homes online. We would take turns discussing what we liked and didn’t like about each house and try to guess which one the couple would actually choose. So once we decided we were ready to buy, Josh applied for the TV show online on a whim, assuming it was a long shot. It came as a shock to both of us when one of the producers contacted us a few weeks later to tell us they were interested in filming an episode in Kansas City. After a few more phone calls and interviews, a camera crew was sent our way to document us on our home-buying adventure.

Along for the ride (and steering the wheel), was our wonderful realtor Monte; who not only went above and beyond what we expected from a realtor, but he also made the home buying experience as smooth and enjoyable as possible. With Monte, we felt like we were with a family member that genuinely cared about us as people, rather than just a real estate agent that was seeking a quick commission. He always had our best interest in mind and was passionate about making sure we found the perfect home.  We’re very grateful for the experience; both for the opportunity to be on House Hunters with footage to look back on of the first home we bought together and for having a realtor like Monte to share it with and make our transition as smooth as possible.

What to look for in a realtor

When choosing the right realtor, make sure to consider the following qualities:

  • Integrity and candor
  • Understanding of what you are looking for in a home
  • Knowledge of the local housing market
  • Quality references and connections
  • Detailed knowledge of the purchasing process
  • Strong work ethic and passion for job
  • Flexible to your schedule and time frame
  • Committed to exceeding your expectations
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When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.

Ms. Crumpton is an AVP/Unit Finance Manager for UMB. She is responsible for financial support in the Operations & Technology Group. She joined UMB in 2007 and has 7 years of experience in the financial services industry.

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2nd step to buying a home—choosing the right loan for you

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So you’re ready to buy a home, and have finished the first step of pre-approval. Did you know that nearly half* of home purchases are from your fellow first-timers? It can be a daunting process, so we’re continuing the step-by-step approach to help you navigate this important financial decision.

There are many home loan choices. Finding the right lender will be the key to obtaining the information you need to make the right decision. The pre-approval process should have uncovered many of the factors that determine which loan will work best for you and let you know what interest rate you might be paying. Remember, to get a good interest rate, you’ll need as high a credit score and down payment as possible. The right lender will be able to guide you and explain the differences in each of the loans you qualify for.

Here is a general discussion of some of the mortgage loans available, to help prep you for your first meeting with a potential lender. The main differences are the size of the down payment and whether the interest rates can change.

Types of mortgage loans:

Conventional vs.Non-Conventional– One of the first decisions you will discuss with your lender is whether you want a conventional or non-conventional loan, which often depends on the size of your down payment.

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Conventional - A conventional loan typically requires a minimum down payment of 5 percent.  If you put down 5 to 19 percent, private mortgage insurance (PMI) may be required. This insurance protects the lender if you do not repay your mortgage.  Typically, you’ll have to pay this insurance until 78-80 percent of your mortgage is left, and then you may be able to remove PMIfrom your payments.  To avoid that extra insurance from the beginning, you’ll typically have to put down 20 percent or more.

Most first-time buyers choose homes with a median value of $147,000*, but in case you’re wondering, the conventional loan limit in most areas is $417,000. These loans can be fixed or adjustable (more on that in a minute). Conventional loans also allow you to have the seller pay up to 3 percent of your home’s closing costs and prepaid taxes and insurance.

FHA (non-conventional) – FHA loans typically require lower down payments than conventional mortgages, but there are also drawbacks to them. For example, FHA loans require mortgage insurance up front and it is usually more than private mortgage insurance with a conventional loan. Here’s how this type of loan works: The Federal Housing Authority does not actually lend the money but insures 100 percent of what the lender funds. FHA loans tend to be the most flexible in their credit guidelines. They usually allow for lower credit scores, higher debt-to-income ratios and as little as 3.5 percent as a down payment. These loans allow for up to 6 percent seller-paid closing costs and prepaid taxes and insurance.

Veterans Affairs (VA) – The VA loan was designed to offer long-term financing to eligible American veterans or their surviving spouses (provided they do not remarry). The VA loan does not require a down payment and does not require monthly private mortgage insurance.

United States Department of Agriculture (USDA) – This loan is intended to help people purchase homes in rural areas. The property must be located within the USDA Rural Development Home Loan footprint. USDA loans offer 100 percent financing to qualified buyers and allow for all closing costs to be either paid for by the seller or financed into the loan.

Fixed vs. Adjustable Rate Mortgages – After choosing a conventional vs. non-conventional loan, it’s time for another decision: do you want a fixed or adjustable rate?

Fixed-Rate Mortgages – Fixed-rate loans are just that, loans that have interest rates that are locked-in for the term of the loan. This means that your rate will not change during the entire time that you have the loan. Keep in mind that even with a fixed interest rate your payment could vary based on changes in taxes or insurance. The repayment of the loan is also spread out, or amortized, over that same fixed period. You can choose from 10-, 15-, 20-, 25- and 30-year fixed rates. Generally, the shorter the term of the loan, the lower the rate, but also the higher the payment. For example, a 15-year loan will usually have a better interest rate than a 30-year loan, but you’ll have to pay more per month in order to get the mortgage paid off sooner. Therefore, choosing the fixed-rate period will be a large part of determining the amount of your monthly payment.

Adjustable Rate MortgagesThese loans typically allow you to have lower payments at the very beginning, but take on higher risk than fixed-rate loans. There is usually an initial time period (1 to 10 years) where the interest rate is fixed. However, the rate can change after the initial fixed period causing the monthly payment to go up. Be sure to talk to your lender about what type of loan is best for your situation. If any of these factors apply to you, your lender can explain in more detail how an adjustable rate mortgage would work for you. However, an adjustable rate may be a good option if:

  • you plan to sell in a few years,
  • you will pay off the loan early, within the next few years, or
  • interest rates are high right now and are anticipated to decrease in the coming years. (not the case today)

To avoid feeling overwhelmed, remember, your lender is there to walk you through everything. Instead, focus on what your needs are. Then, you can outline with your lender what you’re looking for so he or she can provide your best options.

Arrive at your first lender meeting with answers to the following questions:

  • How much will you have for a down payment?
  • What are your preferred neighborhoods?
  • Do you want to get your loan paid off as soon as possible even if it means higher payments, or do you need lower payments with more time to pay it off?

Choosing the right lender is just one part of your home-buying team. Adding an experienced realtor will save you time and money and will be discussed in step three of buying a home.

*statistic source:

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.

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1st step to buying a home: pre-approval

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Imagine walking in to your new house. You moved in a few weeks ago, you’ve unpacked most of your things, and it’s starting to feel like home. But then you wake up from this fantasy and realize you don’t know how to make this dream become a reality. We’re here to help.


The process of purchasing your first home should be exciting and rewarding knowing you are taking control of your finances by investing into your own home. We want to give you a head start with understanding the process.

First things first. You’ll need to shop for a lender. Start with your own bank (a source you trust and believe in) and shop with other lenders as well. You’ll want to compare rates, cost associated with the loan and feel comfortable with the lender’s service levels before you apply.  A good lender will work closely with your specific situation. They will explain the loan and buying process and answer all your questions as a first-time home buyer.

The mortgage loan process has changed drastically over the years, so be prepared that the lender will want at least 30 days to get your loan approved and closed. Processing times will vary based on how complex your personal history is to document and verify. We suggest getting a pre-approval letter from your lender before shopping for your new home.

Why do you need a pre-approval letter?

  • A pre-approval letter will give your real estate agent a price range to know what homes to include in your search. It outlines the loan amount and terms you are approved for.
  • Pre-approval gives you a negotiating advantage. A seller might be more inclined to accept your offer if you have a pre-approval letter, even if you make an offer that’s lower than a buyer without a pre-approval. Sellers want the assurance of knowing their buyer can get financing since they are also planning on a home move.
  • A pre-approval letter is a stronger option than a pre-qualification letter because the approval is based on verified credit, income and asset data that an underwriter has reviewed and approved. The pre-qualification is based only on the data provided on the loan application that has not been verified or reviewed by an underwriter.

In order to expedite your loan process, here is a list of the documentation to bring to your lender when you have your first meeting for a loan application:

  • Last two years of W-2’s and tax returns with all schedules – This allows the lender to evaluate any other income or loss for qualifying purposes. All self-employed borrowers will need to provide a two year history of tax returns to determine income for qualifying purpose.
  • Most recent paystubs to cover 30 consecutive days – The lender will review and calculate income for wage earners.
  • Most recent asset statements to cover 30 days – This statement, also known as your bank statement, will need to show you have sufficient funds in your account to close on the loan. Any large deposits will need to be documented as to where the funds came from to meet loan requirements.
  • Additional information may apply based on the type of loan you are applying for – another important reason to select a lender who will walk you through the process and give you clear explanations.

The home-buying process can be long and complicated. Preparation involved in getting a pre-approval letter is fairly simple and it helps both you and the seller in the long-run.

Stay tuned for part two of this series: The second step to buying a home—choosing the right loan for you.

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Diane Hughes is Sr. Vice President/Director Mortgage Sales for UMB at 1010 Grand Blvd., Kansas City, MO.  She is responsible for the bank-wide mortgage services and has 29 years of experience as a Mortgage Banker. 

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