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- Home Loans from Start to
Finish -
The most important step in obtaining a first time home loan is to
find a mortgage provider who will lend you the money you need for
your dream home and match that with your credit.
Step One: The Loan Application
Filling out a loan application is the first step in obtaining a
mortgage. To start your confidential online application click here.
You'll be asked for information about employment, earnings, savings,
and so forth. It's important to make sure your application is
complete and accurate.
Missing or incorrect information can delay the loan.
You'll be asked to provide supporting documentation, such as W-2's,
recent pay stubs, and perhaps even copies of your income tax return.
Then we will also check your credit report.
Step Two: Loan Processing
Once your loan application has been completed we make sure all the
supporting documentation is complete.Then the loan is moved into
loan processing. The loan processors job is to make sure that all
the additional information is gathered such as appraisal, title ,
home owners insurance etc. It's common for the processor to give the
borrower a phone call to verify facts or request additional
documentation.
Step Three: Underwriting
When the processor has gotten all the paperwork in order, she turns
the file over to the underwriter. The underwriter's job is,
essentially, to check the work of the processor. The underwriter
will compare the facts in the applicant's file to the guidelines of
the loan type being offered, and make sure that all the conditions
are met favorably. As long as you can meet all the guidelines of the
loan, your loan will be approved.
Sometimes there's still some missing information at this point that
will delay your loan approval. For instance, if an appraisal of the
property is required, the appraisal may not have been completed yet.
In cases like these, the underwriter will approve the loan,
conditional upon meeting certain criteria. Then she/he will send the
loan back to the processor, who will make sure the conditions get
met.
Step Four: Closing and Funding
Once the loan is approved by the underwriting department, it goes to
closing. Closing is the process where the lender's office
communicates with the title company to get all the paperwork in
order for settlement.
At this stage, the money is made available for the loan. The money
is wired electronically ahead of time to make sure it's available
for settlement.
At the Settlement Table
The paperwork is done. The conditions of the loan have been met at
every stage of the way. The funds are available. Before you get to
the settlement table, however, you will receive a Settlement
Statement also known as HUD1 that details all the final
costs/numbers for your transaction. You should review this document
and make sure you understand it before proceeding to settlement.
It all comes together at the settlement table. At settlement,
several parties are represented. The buyer and the buyer's real
estate agent will be there, as will the seller and his agent. A
settlement attorney, who acts on behalf of both the buyer and the
seller, conducts the final transaction. If every person has done his
job along the way, the settlement will be smooth, with no
last-minute problems.
Buyers and sellers will each be given a settlement sheet and asked
to review the numbers to make sure they are correct. Since the
numbers are often confusing, the agents and attorneys are available
to answer any questions that may arise.
Closing Costs: What to Expect
There are many items associated with closing on a mortgage. In
addition to your down payment and the settlement attorney's fees,
here's what else you should expect to pay in closing costs for your
first time home loan.
Loan origination fee and discount points - Based on a percentage of
the total mortgage cost, this is how lenders are compensated for
their services.
Appraisal fee - $400. A professional appraiser visits the sale
property to determine its value and condition.
Credit report fee - $50, to determine the borrower's
creditworthiness.
Title company fee - $250 - $350. This is how the title company is
compensated for their services of researching the title and
preparing the deed.
Title insurance - Usually 2% of the total mortgage cost. Title
insurance ensures that if there is ever a problem with clear title
to the property, the lender's money will not be at risk.
Underwriting fees, document preparation fees, and processing fees -
These are costs incurred during the loan application process.
Recording fees and state and transfer taxes - taxes and fees paid to
the locality where the property is located.
Private mortgage insurance - often required by a lender if your down
payment is less than 20% of the property’s value.
Mortgage interest for the current month
Homeowner's insurance - you will probably need to show proof of this
at settlement.
Property taxes
Homeowner Association Fees
After settlement, most mortgage lenders will sell your loan to
another company, who will then take over the servicing of that loan.
This is the norm rather than the exception.
You may want to ask at settlement what you can expect in this
regard.
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