Buying a Home in Minnesota: The Loan Application

After you have come to an agreement on the purchase offer for your Minnesota home, it’s time to get in touch with me convert your preapproval application into a real transaction based on the property you just bought.

Buying a Home in Minnesota Step 5: The Loan Application

It’s an exciting time when you’ve reached an agreement with a seller. Homeownership is within sight! It’s important for us to get started right away after you have reached an agreement.

During the preapproval we based everything on a hypothetical property. After you have the agreement we change all the numbers on the application to match the property you just bought. We use the sales price, the seller paid closing costs, the actual property taxes, the closing date you chose, etc. in order to come up with your new good faith estimate.

At this point we will talk about several key things that we need to accomplish between application and closing:

1) Locking an interest rate. At some point after you have an agreement on the property we need to lock your interest rate. This is generally best done if you have less than 45 days before loan closing. Since interest rates change every day, locking a rate can assure you that no matter how rates change, if we can close within the specified lock period, you will be able to have the rate that you lock at.

2) Order an appraisal. We need to order out an appraisal from an independent appraiser. Their job is to visit the home and appraise it based on recent comparable sales in the neighborhood. The house will need to appraise for at least the purchase price in order to secure the financing we discuss at loan application.

3) Order title insurance. We need to order a title examination and title insurance on the property you are purchasing. We need to verify that when we put a loan on the property you are buying that our mortgage will be in first lien position.

4) Send documentation to underwriting. I will collect any missing documentation from you at this time for your loan file. Once we have what we need to make a decision on your loan we will send your file to our underwriting department. At this stage an underwriter will review all of your documentation to ensure that it all meets with the loan program guidelines.

5) Schedule a loan closing. Your real estate agent will schedule a loan closing on or before the date specified in the purchase agreement.

It is a busy time, especially immediately after you reach your agreement to purchase. While I’ve described above the important things related to your loan application, in my next post I will discuss the things you should be doing between application and closing.