Mortgage Closing Process – What To Expect
Despite the fact that the process of buying a house from state-to-state is different, there are several fundamental steps that you will need to expect to follow when applying for a mortgage loan.
Pre-approval is basically an application for credit as well as the lender’s written commitment that is subjected to further verification of how much exactly lender is going to let you borrow, allowing you to consider what kind of home you may count on. The pre-approval will need a lot more info than the pre-qualification application, including the purchase price of the property as well as the amount of down payment. Getting pre-approved is going to help demonstrate some sellers that you actually have serious intentions.
A mortgage loan application form will ask you for detailed information regarding yourself and the property you intend to purchase and it will require documentation regarding your private finances. The lender is going to study submitted information and will review your credit history.
Locking in a rate
It is a fact that mortgage loan rates change very often. In order to make sure that you get the rate you were initially quoted, you need to have your mortgage rate locked.
A borrower may need to pay points, which represents a dollar amount based on a percentage of a loan amount, to a lender in order to lessen an interest rate on a loan. This will require additional fee yet you could save you money in a long run through paying a smaller interest. Get in touch with a mortgage advisor in order to determine whether those points are a viable option for you.
A property is going to be appraised to determine its actual market value. An appraiser is going to come to your house and is also going to consider prices of similar properties in the area.
In most cases, lenders are going to want a borrower to put at least 20% of a purchase price as a down payment. If you wish to make a lesser down payment, you will probably need to get private mortgage insurance. It is going to protect a lender in case you default on a loan and will be included in your monthly mortgage loan payments.
Loan review process
An appraisal is followed by submitting a mortgage loan file to a lender in order for your loan to be reviewed and evaluated.
Escrow and title preparation
A title company is going to hold all documents and money right up until all approval conditions are met. A title is going to be prepared and it will include a title exam in order to ensure a title to a property is clear.
These are costs that come along with closing a mortgage loan, including application fees, title, points, credit processing and insurance.
All documents will be transferred to a title company for a seller and buyer to sign. All the remaining closing costs and other funds are due at this time. Mortgage closing costs generally will include title exam fees, appraisal fees, title insurance, settlement fees, application fees as well as the credit report fees, etc.,
Once all the funds are in escrow and all conditions are met, loan is funded and deed of trust is recorded and title on the property is transferred and purchase price funds are released to the seller. Right after this step you can take your keys and move into your new home!