Applying for a mortgage sure isn't as easy as it used to be. I find many buyers get confused, frustrated and overwhelmed with the process. However, I believe education is everything. The more you know, the better prepared you are in understanding what will be expected; thus, reducing a lot of those feelings and reactions. George Souto, Activerain associate and mortgage lender, outlines in full detail what the homebuyer applying for a mortgage can expect.
Now that we have covered in theFirst Time Homebuyer Seminar the pre-approval process, chosing a Realtor, and shopping for a house. We next cover the process of actually "Applying For A Mortgage" once their offer has been accepted.
Once they have an excepted contract, it is very important that we get together as soon as possible to get their loan into process, because now the clock has started to tick on the date to obtain a Loan Commitment, and there Closing Date.
But before we get together I go over with them the Loan Programs that are available for them and the Terms for each program. For each Loan Program I will give them the:
- Downpayment- Different Loan Programs have different downpayment requirements. We will discuss each one and the advantages to each.
- Closing Costs- Different Loan Programs have different cost, and they need to know the total amount that they will need to have for the Closing in addition to their downpayment.
- Interest Rates- This is really the first time that interest rates are truly important, because now they have the opportunity to lock in the rate or to lock at a later time. So we will discuss the interest rate for each Loan Program.
- Monthly Payment- For each Loan Program will be different based on the downpayment required and the interest rate for that Loan Program. I will also add the taxes, and homeowners insurance to the monthly payment, as well as PMI, MI, HOA if applicable. I want to make sure that they understand what the total monthly payment will be, and to again make sure that they fully understand the commitment that they are making.
Once they have chosen the Loan Program that they want to apply for I will then give them a list of documents either by e-mail or over the phone that they will need to bring with them when we meet:
- Bank Statements
- 401K Statements & Terms for withdrawal (if 401K money is being used)
- W2's and/or 1099's
- Sales Contract
- Tax Returns (if applicable)
- Divorce Decree (if applicable)
These are the more common documents that are generally needed, but depending on their circumstances there could be others.
When we meet they will have paperwork to sign such as:
- Loan Application (1003) - When we get together I will explain every page of the Application to them, and spend as much time as needed to make sure they understand everything that they are signing. Besides the application they will have to sign:
- Disclosures - Such as the the:
- Good Faith Estimate (GFE) - Which will give them a very close estimate of their total costs, and break them down. The GFE will also disclose if there are any pre-payment fees or balloon payments
- Truth In Lending (TIL) - This will give them their APR, total principle and interest paid over the life time of the loan, late fees, whether the loan is assumable or not. The total monthly payment and interest rate will also be listed here again.
- Rate & Point Lock Letter - Showing whether they locked the interest rate or not, and if they were charged any points for the rate.
- Right to receive a copy of their appraisal.
- Right to personal representation (Attorney)
- Right for us to request tax transcripts
- Right for us to request information from Social Security
- Notice of non-refundable fees
- Adjustable rate disclosure (if applicable)
These are not all of the disclosures but they are in my opinion among the most important. Also different loan programs will require different disclosures, but the ones list above are a part of every program.
At this time they will also choose an Attorney who will be responsible to represent them, and do the Closing Paper Work. Here in Connecticut the Attorney will also be responsible to do the Title Search and obtain Title Insurance.
Once all the documents are collected, application signed, as well as all disclosures, I will make a copy of everything that they have signedfor them. This will assure them that nothing will later be changed without their knowledge and signature. This also gives them an opportunity to further review everything they signed at their own pace at home.
Now that all of this has been done the loan is put into Process, which will be the topic of my next blog in this First Time Homebuyer Seminar Series, Processing The Loan.
Who To Call For Your Mortgage Needs In Connecticut:
George Souto NMLS# 65149 is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 firstname.lastname@example.org, or visit my McCue Mortgage Homepage.