1st Time Homebuyer Seminars ..... Applying For A Mortgage. Now that we have covered in the 1st Time Homebuyer Seminars, the The Opening Questions, Pre-Qualification Process, process of Choosing 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 the Buyer(s) have an accepted contract, it is very important we get together as soon as possible to get the loan into process. It is urgent we get together quickly because now the clock has started to tick on the Sales Contract dates for Mortgage Commitment/Contingency, and Closing. But before we get together, I go over with my Borrower(s) the Loan Programs available to them and the Guidelines for each program. For each Loan Program we will discuss the:
- Down payment- Different Loan Programs have different down payment requirements. We will discuss each one and the advantages for each.
- Closing Costs - Different Loan Programs have different cost, and the Borrower(s) need to know the total amount they will need to have for the Closing in addition to their down payment.
- Interest Rates - This is really the first time interest rates are truly important, because now the Borrower(s) have the opportunity to "lock" in the rate or to "float" the rate and lock at a later time. So we will discuss the interest rate for each Loan Program.
- Monthly Payment - Will be different for each Loan Program based on the down payment required and the interest rate for the Loan Program the Borrower(s) decide to apply for. I will also add the taxes, and homeowners insurance to the monthly payment, as well as PMI, MI, and HOA Fees if applicable. I want to make sure the Borrower(s) understand what the TOTAL monthly payment will be, and make sure they fully understand the commitment they are making.
Once the Borrower(s) have chosen the Loan Program 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 me when we meet to sign the Loan Application and Disclosures:
- Paystubs
- Bank Statements
- 401K Statements & Terms for withdrawal (if 401K money is being borrowed or withdrawn)
- W2's and/or 1099's
- Sales Contract
- Copy of Earnest Money Check(s)
- Tax Returns (if applicable)
- Profit & Loss Statement (Self-Employed Loans)
- Divorce Decree (if applicable)
- Certificate of Eligibility (VA Loans)
These are the more common documents generally needed, but depending on their circumstances there could be others.
Once the Borrower(s) have compiled all the documents they need to bring me, we then meet for them to sign the Loan Application, and Disclosures such as:
- Loan Application (1003) - When we get together I will explain every page of the Application to the Borrower(s), and spend as much time needed to make sure they understand everything they are signing.
-
Disclosures - Besides the Loan Application the Borrowers will need to sign Loan Application Disclosures such as:
-
Loan Estimate (LE) - Which will give them a very close estimate of their total costs, and break them down. The LE will also disclose the Borrower has the right to receive a copy of their appraisal, right to refinance, and whether the Lender will be servicing their loan, or another Lender. The LE also will disclose if there are any pre-payment fees, balloon payments, or points. Prior to October 2015 the Borrower would also sign a separate Truth In Lending (TIL) disclosure which discloses the APR, late fees, and whether the loan is assumable or not. The total monthly payment, and interest rate was also be disclosed on a separate TIL. However, since October 2015 the TIL has been incorporated into the LE.
- Rate & Point Lock Letter - Discloses whether the Borrower(s) locked the interest rate or not, and if they were charged any points for the interest rate. This information is also disclosed on the LE.
- Right to Personal Representation (Attorney)
- Request for Tax Transcripts (gives the Lender permission to request Tax Transcripts)
- Disclosure giving the Lender permission to request information from Social Security.
- Notice of Non-Refundability of Fees
- Adjustable rate disclosure (if applicable)
-
Flood Insurance disclosure informing the Borrower(s) will be required to obtain Flood Insurance if property is in a Flood Zone.
- Attorney Information Disclosure
- Acknowledgment of receipt of HO Counseling Classes. Even though the Borrower is not required to take a counseling classes on the process of purchasing a home. The CFPB mandates the Loan Originator must provide the Borrower with a list of 10 locations the Borrower may attend a counseling class within a 10 mile radius of where they presently live.
-
Loan Estimate (LE) - Which will give them a very close estimate of their total costs, and break them down. The LE will also disclose the Borrower has the right to receive a copy of their appraisal, right to refinance, and whether the Lender will be servicing their loan, or another Lender. The LE also will disclose if there are any pre-payment fees, balloon payments, or points. Prior to October 2015 the Borrower would also sign a separate Truth In Lending (TIL) disclosure which discloses the APR, late fees, and whether the loan is assumable or not. The total monthly payment, and interest rate was also be disclosed on a separate TIL. However, since October 2015 the TIL has been incorporated into the LE.
Different loan programs may require different disclosures, but are the most common required disclosures.
At this time the Borrowers will be given the opportunity to choose their own Attorney for Personal Representation or use an Attorney approved by the Lender who will be doing Closing Paper Work to also represent them. Here in Connecticut the Attorney is responsible to do the Title Search and obtain Title Insurance. At this time I also collect the upfront fee for the Appraisal, and Loan Application which will be applied to the Closing Costs.
Once all the documents are collected, Loan Application signed, as well as all Disclosures, I will make a copy for the Borrower of everything they have signed. This will assure they cannot later claim I changed any of the documents without their knowledge, or they were not made aware of all the documents. Giving the Borrower(s) a copy of all the documents they signed also gives them an opportunity to further review all the documents at their own pace at home.
At this point all the Loan Documents, Disclosures, and the Borrower(s) Documents are packaged together, and I submit the Loan Package into Processing. It is at this point the Underwriter see the file for the first time and will begin to Underwrite the Loan. I will cover the Processing and Underwriting of the loan in my next blog in this 1st Time Homebuyer Seminars Series.
Previous Blogs In This Series:
- 1st Time Homebuyer Seminar Series
- 1st Time Homebuyer Seminar ...... Opening Questions
- 1st Time Homebuyer Seminars ..... Pre-Approval Process
- 1st Time Homebuyer Seminars ..... Choosing A Realtor
- 1st Time Homebuyer Seminars ..... Shopping For A House
******************************************************************************
Info about the author:
George Souto NMLS# 65149 is a Loan Originator 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, #Moodus, #Chester, #Deep River, and #Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com
Comments(7)