If you are like most people, your home will be the most expensive purchase you ever make. And very few people are able to save enough or would want to pay cash for their home. So before you begin to look at houses, you should find
out how much financing you will be able to obtain. This is referred to as getting pre-qualified for a mortgage.
With a mortgage, you will sign a document, called the "note", that specifies the loan amount, interest rate, and terms of repayment. You will also sign a "deed of trust", which gives the home you are buying as collateral against the money you borrowed.
In the event that you don't make your payments, the lender will take steps to take the home back from you, known as foreclosure. Foreclosure is the lender's greatest fear - lenders are in the business of loaning money, not re-selling homes. That's why
the underwriting process is so important - to make sure the borrower has the capacity to make the monthly payments.
Many people find that they qualify for a larger monthly payment than they really want to pay each month. I can work through the numbers with you to determine the price range that is right for your needs, with a downpayment that you can afford and a
monthly payment that feels comfortable for you. And we'll choose a loan program that is right for you.
Once your application is under way, my team and I do everything we can to make sure that the loan process is smooth, surprises are avoided and dates, deadlines and terms are honored.
At the time of loan application, you will authorize and pay for an appraisal. Your loan amount will be based on the lower of the appraised value or the purchase price, and so we want to get the appraisal completed as quickly as possible. If there are
issues with value, you and your realtor may be able to renegotiate your purchase contract.
In order to get your loan closed, we must get approval of both you - the borrower, and of the property you want to buy. To get you approved, you must provide and we must verify documentation that your employment, income,
credit, assets for downpayment and closing costs, and assets for post closing reserves meet the loan program guidelines.
Approval of the property is for the most part determined by the appraisal, but keep in mind that even if the appraised value meets or exceeds the purchase price, the appraisal still must be accepted by the lender. With values falling in many parts
of the country, underwriters are scrutinizing and rejecting appraisals as never before. If the property is a condo, townhome or PUD, there are additional documents regarding the homeowners' association that must be reviewed and approved.
When you apply for your loan, I will give you a Good Faith Estimate of what your HUD-1 Settlement Statement will look like at closing. The GFE will show the amount you are borrowing, your rate and terms, your monthly payment, and the closing costs
for your mortgage. You'll see my estimate of the amount of funds you will need to bring to closing in a certified check. The exact to the penny amount will be calculated by your closing attorney, and he or she may not have this number for you until the
day before or even the morning of closing. Don't be alarmed - it only takes a few minutes in a bank to get a certified check!
The above is courtesy of Frank Rexford, CMPS
I would also like to recommend that you read his article called "Wine and Mortgage Pairing" which does a wonderful job of explaining the different types of mortgages and can help you find which mortgage is best for you. |
