Endure Through It!
Buying a home is definitely a process and sometimes it can take a while. Although some companies have been promising 30 days to close on a house, the closing date is most often set between 45 and 60 days after the seller accepts the offer price. An inspection must be performed on the house and an appraisal also has to be ordered. During this time the mortgage goes to underwriting and the appraisal impacts the closing process.
If the appraisal is higher than the sales price, then the loan typically progresses pretty quickly. However, if the appraisal comes back low, it can slow things down or kill the deal altogether. After you get through this process and the loan has made it through underwriting, you can potentially get an approval. This is usually a time for celebration, and rightfully so.
However, the process isn’t quite over yet. Once you have made it this far, the lender will provide you with a commitment letter. They will sometimes also ask that you meet certain requirements before closing. This all depends on the strength of your credit history, the value of the home, and the current home-buying market. Here is a little bit about what happens next in the process.
By law, the lender is required to provide you with certain disclosures in writing. The two most important disclosure forms are the Truth-in-Lending Disclosure Statement and the Good Faith Estimate Form. Your loan officer is supposed to provide you with a Good Faith Estimate Form within three days of you submitting your application. It outlines the settlement and closing costs that you are likely to incur when closing on your loan. It does not provide you with actual costs, but it should give you a pretty good estimate of what the settlement and closing costs should be. The Truth-in-Lending Disclosure Statement provides details about the total cost of the mortgage based on the terms of the loan agreement.
Once the loan has been approved, your lender will give you a letter of commitment. This approval letter outlines the terms of the loan agreement. The commitment letter stipulates the annual percentage rate you will be charged for your loan and the monthly costs to repay it. Any conditions your lender is asking you to meet before actually closing the loan are also stated in this letter. The lender will ask that you return a signed copy of the commitment letter within a specified time period before they proceed with the loan. These conditions may include things like providing them with a copy of a homeowner’s insurance policy, flood insurance, and even title insurance. The lender may also ask you to submit an inspection report and a survey report outlining the specific property lines, boundaries, and encroachments.
The HUD-1 Settlement Statement completely details every aspect of the loan, including all debits and credits. It details the interest rate, the cost of the loan and all closing costs that will be due at the time of closing. The date, time and location of closing are also included in the HUD-1 Settlement Statement. The statement should be made available to you 24 hours before the actual closing so that you have time to review it before signing the closing paperwork. If all terms are agreeable, you don’t need to do anything but show up for the closing. Of course, you must be prepared to pay any closing costs that you will be responsible for.
Make sure you ask away if you don’t understand something. Your real estate buyer’s agent is there to represent you and they will learn things along the way. Once your home loan is approved, there is still a process to endure. It is not quite your home yet, but you are that much closer. There is a light at the end of the tunnel if you look on the bright side – just a few more steps to complete and the home will be yours to cherish!