- Gather your documents into one file
- Choosing the right lender
Your file should contain all of your important financial documents. Regardless of the loan type, lenders will need information about you. Make copies of financial statements; bank accounts, investments, credit cards, auto loans, recent pay stubs and two years’ tax returns.
Today, lenders can be found through a variety of sources. You can find and apply to lenders over the internet and through referrals from my team. We would be happy to suggest lenders that our past clients have used successfully, who have proven themselves competitive and capable even with problem properties or poor credit.
Interview several lenders to evaluate the following:
- Ability to explain things clearly and return your phone calls in a reasonable time period
- Competitiveness of interest rates, costs & fees.
- Availability of loan programs that suit your credit profile and desired property
- Access to local loan approval committee that understands the kind of property you are buying
Today there are so many types of loans on the market that it is beyond the scope of this page to list or explain them all. Your lender is the best person to help you select a loan program to suit your needs. Below is a summary of the three most popular loan types we see in practice:
- Fixed loan: The fixed rate loan assures your monthly payments will stay the same over the life of the loan, which is typically between 15 and 30 years.
- ARMs (adjustable rate mortgages): ARM’s may be suitable if you plan to sell or refinance your home within the next few years. The starting interest rate is typically lower than a fixed rate loan, saving you money initially.
- Intermediate ARMs: Also called Hybrid Loans, these loans can offer fixed interest rates for the first 3, 5, 7 or 10 years after which the interest rate adjusts with the market every 6 months or year thereafter.
There are several benefits to going the extra mile and getting a pre-approval letter. First of all, you will know exactly how much real estate you can afford. When you find a property you want to buy, your offer will be in a better positioned than someone less prepared. Finally, being pre-approved is more efficient; it reduces the amount of time it will take your lender to fund your loan.
The lender will have an analyst, usually called an “underwriter”, crunch your numbers and verify your documentation to confirm your ability to repay the loan. Once you are in contract on a property, there may also be a loan approval committee which will meet to review the underwriters’ conclusions regarding your creditworthiness, and to evaluate the property on which they are lending. This is called the underwriting process, and questions are bound to arise. Be sure to return your lender’s calls promptly to keep the process moving forward smoothly.
When the lender is ready to draw documents on the loan, my team will review and sign the final settlement documents. Then, you will need to schedule an appointment time to sign your loan documents with an escrow officer. Escrow will call you to make the appointment to come to their office or to send a notary to your home or office. Once you have successfully signed all the documents they are sent back to the lender for final review.
Your lender will now release funds to escrow. This happens 1-3 days after you have signed the documents. Once, funds have been processed by escrow your loan documents will be sent to the county courthouse to be recorded.