<p>Before heading out in-person, we recommend putting together a checklist of your top priorities and ranking them in order of importance.</p>
<h3 id="listoutneedsvswants">LIST OUT NEEDS VS. WANTS</h3>
<p>Have your eye on a certain type of home, a list of preferred amenities, or a specific location? It helps to organize your list into Needs and Wants. 
This can help: </p>
<ul>
<li>prevent emotional buying; </li>
<li>eliminate homes that likely won’t work for you; </li>
<li>help you make appropriate compromises; and </li>
<li>make your real estate agent’s job easier. </li>
</ul>
<p>Here are 4 things to consider when making your list:</p>
<h3 id="1whatareyourlocationpriorities">1. What are your location priorities?</h3>
<p></p><div class="indent">
Educate yourself about your target neighborhood—economic conditions, crime rates, family friendliness, schools, neighbors, amenities, utilities, and commute time, to name a few. Do your online research and ask your real estate agent to help you find this information.<p></p>
<p></p><div class="note">
<strong><em>House Hunt with an Edge</em></strong><br>
Mr. Couper’s StreetSmarts gives you power to browse millions of listings, get real-time housing market insights, and set up Home Alerts. You’ll never have to worry about missing out on your ideal home. <strong><a href="https://mrcooper.xome.com/">Start Searching</a></strong>
</div>
</div><p></p>
<h3 id="2whathomefeaturesarenonnegotiable">2. What home features are non-negotiable?</h3>
<p></p><div class="indent">
Whether you’re thinking about architectural styles, or perks like a pool, online listings may help you decide what is a deal-breaker and where you’re more flexible.
</div><p></p>
<h3 id="3howlongdoyouplantoliveinyournewhome">3. How long do you plan to live in your new home?</h3>
<p></p><div class="indent">
The <a href="https://www.nar.realtor/blogs/economists-outlook/how-long-do-homeowners-stay-in-their-homes#:~:text=As%20of%202018%2C%20the%20median,time%20holding%20onto%20their%20residences.">National Association of Realtors</a> says the average homeownership is about 13 years. But everyone has different goals. Be sure to consider your long-term goals before ruling out any potential homes.
</div><p></p>
<h3 id="4whathaveyoulearnedfromyourcurrentlivingsituation">4. What have you learned from your current living situation?</h3>
<p></p><div class="indent">
Your current home should inform your checklist for your next home. It’s easy to list out the common negative issues (not enough bedrooms, lack of a remodeled kitchen) but try to think positive. What do you love about your existing home? 
Identifying these details can help you find a home you love.
</div><p></p>

From fixer-uppers to new construction, it’s time to see what the market has to offer

Organize Your Priorities

Remember that you’ll need cash for upfront costs. How much cash you’ll need to buy a house will depend on factors such as the price of your home, your financing options, or even what negotiations you make with the seller.

And thinking about what you are comfortable paying every month is another way to truly understand what you can buy, which is every bit as important as the loan amount you may qualify for with a mortgage lender. 

Here are 5 common expenses that may factor in:

###1. Down Payments###
[Indent]
Many down payments are between 3% and 20% of the sale price, but the specific amount of down payment required by a mortgage lender varies.   
Contact a [Mr. Cooper Mortgage Professional] (/get-started/quote) for more information.
[/Indent]

###2. Closing Costs###
[Indent]
It’s usually smart to prepare for 2%–6% of the purchase price. So, if you’re buying a home worth $200,000, you might pay $6,000–$12,000 in closing costs. (See ***Understanding Closing Costs*** for more details.)
[/Indent]

###3. Property Taxes and Insurance###
[Indent]
Property taxes and homeowners insurance can also contribute to how much cash is needed upfront to buy a home. Mortgage lenders often require you to put deposits toward these expenses in an [escrow account] (/help-center/escrow/escrow-account-definition) so the lender can pay them on your behalf later.
[/Indent]

###4. Cash Reserves###
[Indent]
Some lenders require borrowers to have a cash reserve. Checking and savings accounts are common cash reserve options, but lenders may also accept other liquid assets such as money market funds, stocks, and certificates of deposit.
[/Indent]

###5. Moving Costs###
[Indent]
Don’t forget about non-mortgage-related expenses like moving costs, utility deposits, and new furniture. According to [moving.com] (http://www.moving.com), the average “long-distance move” of 1,000 miles can cost almost $5,000.
[/Indent]

###Crunch the Numbers###
[Indent]
Use our [mortgage calculators] (/calculators) to find a monthly mortgage payment that makes you feel comfortable. You can plug in the numbers to find your ideal price range, get a sense of your monthly mortgage payment amount, and identify how much you can—and should—borrow.
[/Indent]

As you start your homebuying journey, dream big—but don’t forget to think about your wants vs. needs

Calculate Your Budget

###Check Your Credit Score###
[Indent]
Lenders use your credit score as one factor when determining your loan amount and interest rate.   
- Most use credit reports from the three primary credit bureaus (Experian, Transunion, and Equifax) to evaluate your credit score.    
- Generally, homebuyers with higher credit scores qualify for lower interest rates.     

You can claim a **free copy** of your three credit reports **every 12 months** from [AnnualCreditReport.com] (www.annualcreditreport.com) or by calling 877-322-8228. 
[/Indent]

###Prep Your Income and Employment Information###
[Indent]
Lenders usually require proof of income and a work history of **2 years** that demonstrates a consistent income. If you suffered a job loss due to the pandemic, lenders may factor that in.   
 
Proof of income can come from: 
- recent pay stubs; 
- W-2s; 
- income tax returns;
- proof of alimony;
- child support documents; or 
- other income statements.
[/Indent]

###Calculate Your Debt-to-Income (DTI) Ratio###
[Indent]
This ratio compares your combined monthly debt payments to your monthly gross income. You’ll want to check with your lender for their DTI requirements, but generally speaking, the lower the better!

[Example]
**Example:**
If you have a $1,500 monthly mortgage payment, a $500 monthly auto loan payment, and pay an additional $400 in student loan payments and other debt like credit cards or personal loans, your combined monthly debt payment would be $2,400.   
[Indent]
***($1,500 + $500 + $400 = $2,400)***
[/Indent]    
If your gross monthly income is $6,000 then your DTI ratio would be 40%.   
[Indent]
***($2,400 ÷ $6,000 = 0.4 or 40%)***
[/Indent]  
[/Example]
[/Indent]

###Evaluate Your Options if You Currently Own a Home###
[Indent]
If you already own a home, you may be considering several different options. Are you keeping the property and buying a new home or do you need proceeds from the sale to purchase your next home.

Whatever the case, understanding your options and getting clear line of sight into the keep or sell scenarios is something you want to explore early.
[/Indent]


Credit history, total debt, savings, income, and many other factors help determine how much home you can buy

Review Your Financial Health

Step 1: Get Prepared

Real estate agents act as your personal representative, helping look out for your best interests, finding homes that meet your criteria, helping you make and evaluate offers, and even negotiating on your behalf. We recommend spending time to make sure you find the right one. 

Here are some questions to ask before hiring one:

###How many homes have you helped buyers purchase and or sell in the past year?###
[Indent]
- You should get a sense of how much expertise the agent has to navigate the current market and that their experience fits your specific needs. 

- You may also want to understand their local or neighborhood knowledge and whether they specialize in certain types of real estate transactions (land, rentals, or investment properties may or may not be as relevant to your needs).
[/Indent]

###How many years of experience do you have and do you work full- or part-time?###
[Indent]
- A seasoned agent can help you avoid overpaying and spot common problems with a house. 

- But equally important is understanding how much time and effort an agent typically puts toward clients. It can also reveal if an agent will be available for last-minute showings, negotiations, and inspections.
[/Indent]

Choosing a great real estate agent is one of the most important parts of the homebuying and selling process

Find the Right Agent

Each loan option is made up of 3 elements:
1. Loan Term
2. Interest Rate Type
3. Loan Type

###1. Loan Term###
[Indent]
This represents how long you have to repay your loan. 
- The most common loan terms are 30 years and 15 years, but there may be other durations depending on your loan type and other factors. 
- Usually, the **longer** your loan term, the **more interest** you’ll pay over the life of the loan, and your interest rate may be higher for a 30-year term than a 15-year term. 
- Loans with **shorter terms** generally have **lower interest** costs but **higher monthly payments** than loans with longer terms, because you are paying the entire loan off in a fewer number of payments.
[/Indent]

###2. Interest Rate Type###
[Indent]
The choices are generally fixed rate or adjustable rate. This choice affects whether your rate and payment changes over the course of the loan or remains the same.

**Fixed Rate**   
[Indent]
A fixed-rate mortgage remains consistent over the entire term of the loan. That means monthly payments are more predictable because the total amount of principal and interest that you pay each month **does not change**. 
- Insurance and taxes, which are often included in your monthly payment if your loan is **escrowed**, likely will increase over time because these costs **generally rise**.
- A fixed-rate option could be best if you value more certainty in long-term costs.
[/Indent]

**Adjustable Rate**   
[Indent]
These types of mortgages do exactly what their name suggests—**the rates adjust periodically**. Adjustable-rate mortgages (ARMs) typically have 2 periods: 
- During the **initial period**, often 5 or 7 years, your interest rate is fixed and **won’t change**. 
- **After the initial period**, your loan is subject to adjustment periods, and the rates will adjust to current market conditions. This means there is a **risk** of the rate and the monthly **payment increasing**. 

ARM terms vary though, so contact a ***Mr. Cooper Mortgage Professional*** for more information.
[/Indent]
[/Indent]

###3. Other Popular Loan Options and Benefits###
[Indent]
**Higher Loan Amounts**      
[Indent]

Loan amounts for most government-backed mortgages are capped based on the county where the property is located. Today, most counties have a limit of $766,550 for “*Conventional*” loans. 

But if you need a higher limit, there are “*Jumbo Loan*” options that can allow qualifying homebuyers to borrow up to $2.5M.
[/Indent]

**Low and No Down Payment Options**
[Indent]
While you might see 20% as the common down payment amount suggested for your mortgage, there are options where **qualifying borrowers** can put as little as **3.5% or even 0% down**.    
These options are usually available through **government programs** to help make mortgages more affordable for homebuyers.
[/Indent]

**Closing Costs**
[Indent]
Some loans and lenders allow homebuyers to **roll their closing costs into the mortgage**—freeing up cash that would otherwise be paid on the day the loan closes.
[/Indent]

**Flexible Credit Requirements**
[Indent]
Some government-backed programs make it easier for borrowers with lower credit scores to qualify for mortgages. You may hear FHA loans mentioned. These are loans backed by the Federal Housing Administration. 

But there may be state or local programs available too that help borrowers who otherwise wouldn’t be able to afford or qualify for a mortgage.
[/Indent]

**Veteran Benefits**
[Indent]
Former and active-duty service members and qualifying family members may be eligible to take advantage of special veteran-only benefits such as:
- flexible credit requirements; 
- lower-interest mortgages; and 
- capped closing costs. 

Make sure to ask one of our Mortgage Professionals about this option if you are a veteran.
[/Indent]
[/Indent]
Our [Mortgage Professionals] (/get-started/quote) can help find the type of loan that is right for you.

No two borrowers are exactly alike—that’s why home loans come in so many varieties

Know Your Mortgage Loan Options

Step 2: Understand Your Options

###What Is a Pre-Approval?###
[Indent]
It’s a letter from a lender that indicates the type and amount of loan you may qualify for. It gives you a solid idea of how much you qualify for to help you target a specific price range when home shopping.
[/Indent]

###How To Get Your Pre-Approval Letter###
[Indent]
Mr. Cooper offers a simple, fast, and free Pre-Approval process. Just provide some basic information (income, assets, etc.), we’ll do a soft credit check that won’t impact your credit score, and then we’ll either provide your Pre-Approval letter or reach out if we have questions or need additional information. The whole process takes just a few minutes.

**There Are No Commitments**    
Getting Pre-Approved with Mr. Cooper does not obligate you to get a mortgage or buy a house.
[/Indent]

###Why Get a Pre-Approval Letter?###
[Indent]
**1. It Helps Your Real Estate Agent**    

[Indent]
The [National Association of Realtors] (https://www.nar.realtor/sites/default/files/documents/2022-home-buyers-and-sellers-generational-trends-03-23-2022.pdf#page=49) says: “Realtors® prefer to work with home buyers who have a pre-approval in hand for two reasons. First, a Realtor® knows the deal isn’t likely to fall through, and second, when they know what you want and what you can afford, Realtors are able to do a better job of finding your dream home.”
[/Indent]

**2.	It Speeds Up the Buying Process**    
[Indent]
Your lender will already have some of the key information they need at other points in the homebuying process, and you can focus on houses in your price range to make shopping more efficient.
[/Indent]

**3.	It Lasts 120 Days**    
[Indent]
Mr. Cooper’s pre-approval letters are valid for up to 120 days. Which should give you plenty of time to find and negotiate your new home purchase. And you can always level-up to a [Verified Approval] (/purchase/prequal) when you are ready to make an offer on a house.
[/Indent]
[/Indent]

[Note]
**_A Verified Approval Is Even Stronger_**    
A Verified Approval is a step above a Pre-Approval. Lenders only provide them after verifying your finances, and they can give sellers even more confidence in your bid.    
If you’ve already found the right home, a Verified Approval is what you’ll want!
[/Note]

Learn how much home you can qualify to purchase by getting pre-approved for a mortgage loan

Get Pre-Approved for a Mortgage

Step 3: Get Pre-Approved

When viewing a home, be thorough. 
- Test AC &amp; Heating systems, outlets, showers &amp; toilets, and all appliances. 
- Don’t forget to check on warranties. 
- Take notes of repairs or upgrades you’ll have to consider if you decide to buy the home. 

Here are 6 common house-hunting priorities:

###1. Home Condition###
[Indent]
Whether you’re looking for a renovation project or a move-in ready home, be sure to scrutinize the property’s condition. It could affect whether a home will qualify for a mortgage, especially with FHA loans.
[/Indent]

###2. Square Footage###
[Indent]
Whether you need space for your kids to play and grow, or are downsizing to a smaller footprint, make sure the home fits your needs for now—and the future.
[/Indent]

###3. Flexible Rooms###
[Indent]
Keep an eye out for opportunities to create spaces you might need—like a home office, gym, or playroom.
[/Indent]

###4. Outdoor Space###
[Indent]
Think about your lifestyle when you look at outdoor spaces. Whether you love hosting barbecues in the summer, or just need space for your dog to roam, you’ll want to think ahead while home shopping.
[/Indent]

###5. Neighborhood Traffic, Noise &amp; Feel###
[Indent]
Make sure to look at properties you like at different times of day and different days of the week.

That quiet street close to the school at 10 a.m. on Thursday may be quite different at school drop-off and pick-up time. Are those train tracks just outside the backyard still in use? If so, when? Is the house you are considering one of the first in a new neighborhood? If so, are you OK with construction traffic, noise, and possible service disruptions for the foreseeable future?
[/Indent]

###6. Freeze Rates While You House Hunt###
[Indent]
Don’t let interest rates creep up while you’re shopping for a home. With Mr. Cooper, you can freeze your rate for 90 days while you search for a home you love. And, if rates drop during that time, no problem. You’ll have the option to float your rate down, too.

Ready to learn more about Rate Freeze? Call a Mr. Cooper Mortgage Professional now at 833-786-2043.
[/Indent]

Once you have a checklist of everything you want in a home, it’s time to start touring properties

Check Out Homes in Person

Before heading out in-person, we recommend putting together a checklist of your top priorities and ranking them in order of importance.

###LIST OUT NEEDS VS. WANTS###
Have your eye on a certain type of home, a list of preferred amenities, or a specific location? It helps to organize your list into Needs and Wants. 
This can help: 
- prevent emotional buying; 
- eliminate homes that likely won’t work for you; 
- help you make appropriate compromises; and 
- make your real estate agent’s job easier. 

Here are 4 things to consider when making your list:
###1. What are your location priorities?###
[Indent]
Educate yourself about your target neighborhood—economic conditions, crime rates, family friendliness, schools, neighbors, amenities, utilities, and commute time, to name a few. Do your online research and ask your real estate agent to help you find this information.

[Note]
**_House Hunt with an Edge_**   
Mr. Couper’s StreetSmarts gives you power to browse millions of listings, get real-time housing market insights, and set up Home Alerts. You’ll never have to worry about missing out on your ideal home. **[Start Searching] (https://mrcooper.xome.com/)**
[/Note]
[/Indent]

###2. What home features are non-negotiable?###
[Indent]
Whether you’re thinking about architectural styles, or perks like a pool, online listings may help you decide what is a deal-breaker and where you’re more flexible.
[/Indent]

###3. How long do you plan to live in your new home?###
[Indent]
The [National Association of Realtors] (https://www.nar.realtor/blogs/economists-outlook/how-long-do-homeowners-stay-in-their-homes#:~:text=As%20of%202018%2C%20the%20median,time%20holding%20onto%20their%20residences.) says the average homeownership is about 13 years. But everyone has different goals. Be sure to consider your long-term goals before ruling out any potential homes.
[/Indent]

###4. What have you learned from your current living situation?###
[Indent]
Your current home should inform your checklist for your next home. It’s easy to list out the common negative issues (not enough bedrooms, lack of a remodeled kitchen) but try to think positive. What do you love about your existing home? 
Identifying these details can help you find a home you love.
[/Indent]

Step 4: Shop for Your Home

###Present a Verified Approval Letter###
[Indent]
This shows sellers you’re a serious bidder and your deal is less likely to fall through.
[/Indent]

###Have a Guaranteed Closing Date###
[Indent]
Use a lender who offers a closing guarantee, like Mr. Cooper’s [Close On Time Guarantee] (/get-started/home-loan?internal_ref=buy_closing_close_on_time_guarantee_read_more&amp;web_keyword=buy_home_loan). They give sellers and agents added confidence at closing.
[/Indent]

###Make an Earnest Money Deposit###
[Indent]
This “good faith deposit” helps show sellers you’re serious about buying. Earnest money deposits typically range from 1%–3% of the purchase price and usually go toward your down payment and closing costs.
[/Indent]

###Offer Contingencies###
[Indent]
Contingencies can sweeten the deal for a seller or buyer. Consult with your real estate agent to learn what could help your offer stand out.
[/Indent]




###BE PREPARED FOR THE SELLER TO RESPOND IN 1 OF 3 WAYS AFTER YOU MAKE YOUR OFFER:###
[Indent]
**1. Accept the Offer**    

[Indent]
If they accept your offer, it’s time to move on to the next step.
[/Indent]

**2. Reject the Offer**    
[Indent]
If they reject your offer, you can try to submit another offer or move on to another home.
[/Indent]

**3. Counter Your Offer**    
[Indent]
The seller can also respond with a counteroffer. They could adjust the purchase price or the terms of the sale. You can accept the counteroffer, reject it, or make your own counteroffer.
[/Indent]
[/Indent]

While it helps to make the highest offer, there are other ways to help gain an advantage

Make Your Offer Stand Out

Here are the final 5 steps to take before closing on your new home:

###1. Finalize and Submit Your Loan Application###
[Indent]
The first step after an accepted offer is to apply for a mortgage. 
- Because you’ve already done your research to find your best loan options, it’s time to notify your lender.
- And if you’ve already worked with them for your Pre-Approval or Verified Approval, they should be in a position to get moving quickly.

We make the process fast and simple. You can get started [online] (/get-started/quote) or by calling a Mr. Cooper Mortgage Professional at 833-818-1146.
[/Indent]

[Example]
**Pro Tip:**
Having the required mortgage documents ready to go can help speed up the process. 
[/Example]

[Indent]
Here’s a list of some key documents you might need to submit with your application:
- Purchase contract signed by all parties
- Identification for each borrower (Photo ID)
- Authorization to pull credit report
- 1–2 years of tax returns (personal, business, and/or income)
- 2 years of W-2 forms
- The most recent 30 days’ worth of pay stubs
- Most recent 2 months of statements for all accounts listed on application (bank accounts, investment accounts, retirement accounts, credit cards, student loans)
- A declaration of any legal circumstances that may affect your financial situation (divorce, alimony, child support)
- Letter of explanation for any large deposits (gift letters, sale of asset)
- Rental history
[/Indent]

[Note]
**_A Note About Your Credit_**    
Don’t make any big purchases or apply for a new line of credit during the loan application phase. 
- Either could hurt your credit score and may affect your ability to qualify for your loan.
- Mortgage lenders typically do a last-minute check of your credit before you go to closing and significant changes can impact loan approval.
[/Note]

###2. Get a Home Inspection###
[Indent]
Although a home inspection isn’t always required by your lender, getting one is always wise. It gives you a better sense of exactly what you’re buying. 
- Home inspectors will test electrical and plumbing systems, check appliances, check for anything harmful such as lead paint or mold, and inspect other safety measures. The inspector will then give you a report detailing any issues with the home. 
- Buyers are usually responsible for selecting the inspector and paying for their services.
[/Indent]

###3. Obtain a Home Appraisal###
[Indent]
A home appraisal determines the value of the property you are buying. If your home appraisal comes back lower than the purchase price, the lender may not lend you the full amount to purchase the property. 
- If this happens, you can ask the seller to reduce the price or you could be liable for making up the difference between the agreed upon sales price and the appraised value. 
- Many buyers include home appraisal contingencies for this reason. This will enable you as the buyer to cancel the purchase contract if the home appraisal comes back lower than the agreed selling price.
[/Indent]

###4. Do a Final Walkthrough###
[Indent]
A final walkthrough allows you to make sure that the seller has everything in order. You should make sure the seller hasn’t left any belongings, check to ensure requested repairs were made, and double-check the home’s key components and systems (A/C, heating, irrigation, etc.) to make sure everything is in working order.
[/Indent]

###5. Ask for Repairs or Credits###
[Indent]
After your inspection, you could ask the seller to correct any problems or issues surfaced in the inspection. Here are a few ways to address the issues with the seller:
- Request that the seller help cover some of your closing costs.
- Ask that the seller repair the problems or issues before you close.
[/Indent]

Imagine this: You find a home you love, you make the best offer, and it gets accepted!

Offer Accepted! Now What?

Step 5: Buy Your Home

Here are some of the most common closing costs:

###Escrow Deposit###
[Indent]
The money you put in an [escrow account] (/help-center/escrow/escrow-account-definition) each month is used to pay property taxes and insurance related to your property. 
- Some lenders may require you to escrow depending on the circumstances of your mortgage. 
- If you have an escrow account, you typically need a [2-month] (/help-center/escrow/minimum-required-balance) deposit up front.
[/Indent]

###Survey Fee###
[Indent]
The cost for surveying to confirm dimensions and area of the property. 
- The survey includes the width and depth of the lot, as well as other details. 
- In some states the seller must pay for the survey prior to the closing so that it is presented as part of the loan application.
[/Indent]

###Private Mortgage Insurance (PMI)###
[Indent]
[PMI] (/help-center/escrow/mortgage-insurance-pmi-mip) protects the lender against default. 
- It’s generally required when the down payment is less than 20%. 
- It’s usually included as part of the monthly payment, but in some cases you can pay it upfront as a part of closing costs.
[/Indent]

###Title Insurance###
[Indent]
Under owner’s coverage, the title to your home is insured if disputes or claims arise after closing.
[/Indent]

###Property Taxes###
[Indent]
As a buyer, you only pay for the portion of the tax period that you own the home. So, if your new loan starts December 1st, you’ll typically only owe for only that month and the previous owner will pay 11 months’ worth of taxes at closing. 

[Example]
**Pro Tip:**    
You could qualify for a [Real Estate Tax Exemption] (/help-center/escrow/real-estate-tax-exemption), which helps reduce your tax bill by allowing you to shelter an eligible portion of your home’s assessed value from property taxes.    
Exemption laws vary on a state-by-state basis. For example, some states automatically offer a homestead exemption. In other states, you may have to fill out an application
[/Example]

[Note]
**_Note:_** If you are buying a [new construction] (/help-center/escrow/new-construction-property-taxes) home, be aware that taxes may **increase significantly** in the next tax year because they likely were only assessed on the land value in the year the home was built.
[/Note]
[/Indent]

[Note]
**_!! Beware of Closing Scams !!_**    
Scammers may pose as your real estate agent, settlement/title agent, or another trusted source to steal your closing funds. These [simple tips] (/blog/mortgage-scams-resource-center/) can help protect you.
[/Note]

##Breaking Down Your Mortgage Payment##
It might seem like one lump sum, but your mortgage payment is made up of several key parts:

###Principal###
[Indent] 
This is the amount you borrowed for your mortgage loan. 
- A portion of each payment goes toward paying off your outstanding principal. 
- In the early years of your loan, the principal portion is small, but it increases with each payment and helps you build equity. 
[/Indent]

###Interest###
[Indent]
This is the amount your lender charges for the money you borrowed. In the early years of your loan, the interest portion is larger, but it lessens with each payment. 
[/Indent]

###Private Mortgage Insurance (PMI)###
[Indent]
For conventional loans, unless you have 20% equity in your home, a small portion of your monthly payment goes toward paying for PMI, which protects your lender in case a borrower defaults. Once you’ve reached 20% equity in your home, PMI [may be eliminated] (/help-center/escrow/mortgage-insurance-pmi-mip) from your mortgage payment.
[/Indent]

###Escrow Account *(If Applicable)*###
[Note]
**_Reminder:_** An escrow account is where funds are held to pay property tax and insurance bills on your behalf. If your loan is escrowed, a part of your mortgage payment goes into your escrow account every month to make your property tax and insurance payments for you. 
[/Note]

[Indent]
**Property Taxes**    
A portion of your monthly payment will be placed in an escrow account for your lender to use to pay your property taxes on your behalf. 

**Homeowners Insurance**    
A portion of your monthly payment will be placed in an escrow account for your lender to use to pay your homeowners insurance, which protects against storm damage, fire, theft, and accidents that may occur on your property.
[/Indent]

Closing costs shouldn’t be a surprise, so let’s review what you can expect

Understanding Closing Costs

Here’s what you can expect during the closing process:

###Before Closing Day###
[Indent]
In the days leading up to closing day, your lender will send you a Closing Disclosure, which outlines what you need to pay at closing and summarizes your loan details. 

You’ll also need to share various mortgage documents required by your lender. Having those documents prepared ahead of time can help speed up the process and keep you organized.
[/Indent]

###On Closing Day###
[Indent]
Be sure to bring: 
- your government-issued ID; 
- a copy of your Closing Disclosure; and 
- proof of funds for your closing costs, or in some cases a money order addressed properly. 

During the meeting, you’ll sign all the mortgage closing documents related to the home sale, including the mortgage note and home deed. These documents officially transfer ownership of the home to you.
[/Indent]

[Note]
**_Review Documents Carefully_**    
With so many documents to sign, closing day can be a stressful time. Keep in mind that you should closely review all documents and take time to ask questions.
[/Note]

It’s finally time to gather your important information and sign the necessary documents that finalize your home loan

What To Expect at Closing

Step 6: Close on Your Home

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Complete Homebuying Guide (PDF)

Reference Materials

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Organize Your Priorities

LIST OUT NEEDS VS. WANTS

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2. What home features are non-negotiable?

3. How long do you plan to live in your new home?

4. What have you learned from your current living situation?

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