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To ensure that your home buying experience is successful, it is important that you start the process of
obtaining a loan as early as possible. To eliminate any complications, you should try to get pre-approved for a loan
before you start your home search. At the very least you should go through the pre-qualification process. This involves
meeting with a lender, or a mortgage broker, to determine the amount of your down payment, the loan amount a lender
would likely let you obtain, and the amount of your closing costs. All of this will help you determine the price range
for your home search.
Below is an outline of the recommended steps in the loan process (make sure to check with your lender
to see if there are additional steps):
Complete Loan Application
A mortgage broker or lender will help you complete the loan application as well as obtain all necessary
documentation. The "Uniform Residential Loan Application" requires personal information such as your income, assets,
liabilities, and a description of the property in question. You will need to provide certain documents that pertain
to your employment, income, money in your bank accounts, etc.
Click here
to download the Loan Application Document Checklist
Review Loan Programs
There are many different types of
loan programs available to home buyers today. With the varying available programs to choose from, it's hard to
decide which program is right for you. When considering a loan for you, think about how long you plan on keeping the
loan (or the house). If you think you will be selling the house in a few years, you may consider a short-term adjustable
loan, or even an interest-only loan. If you know that you will be in the house for a long time, then you should
consider a fixed rate loan that you will be paying towards the principal of the loan.
You should also determine what interest rate you need to comfortably afford the house. Different loan
programs offer ranges in the available rates they offer. An option to get a lower interest rate is to pay "points"
toward the loan. Each point is equal to one percent of the loan. The more points you pay, the lower your rate will be.
Work with your mortgage broker, or lender, to determine what your short and long term goals are. With
this information you should be able to figure out which loan programs best works for you.
Loan Submission / Approval
Your completed loan package will be submitted to the lender. The lender's underwriting department will
review your package against their guidelines. This involves them reviewing your credit history, employment history,
assets, and the subject property. The lender may have additional document and condition requests.
Closing
Once all of the lender's conditions have been satisfied, the lender will send the final loan documents to your title
company for you to sign. The following is a list of items you will need for your signing appointment:
Identification:
One of the following forms must be presented in order for your signature to
be notarized: current state driver's license, passport, or DMV ID card.
Cashier's Check:
If applicable, you need a cashier's check, or bank certified check, made
payable to your title company for your down payment and closing costs. A personal check may not be accepted and will
cause a delay in the closing.
Fire/Hazard Insurance:
You must have fire/hazard insurance in place before the lender will
send any money to your title company. Provide your title office with your agent's name and contact information so
they can make sure that the insurance complies with the lender's requirements.
Once you have signed the loan paperwork, the title officer will return the documents to the lender
for a final review. After the completion of the review, the lender will contact your title officer so that the final
paperwork can be completed.
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