As a mortgage broker for many years, I help clients in Arizona, California, Colorado, and Florida choose and apply for the ideal home loans for their dream homes. Earlier this year, I went through the homebuying experience for the first time all on my own.
I learned quite a lot! And I’ve been sharing my story on my blog for the past few months.
This month, I share my fairytale ending: My last steps to purchasing the home of my dreams!
There’s nothing like a pending appraisal on a home you love to initiate nail-biting tendences! And this is what happens after you complete the inspection phase.
The appraisal is an assessment of the home’s value. It’s based on recent sales and comparable conditions of similar homes in close proximity to the home you want to buy.
Appraisals are an important piece of the loan process.
After all, you want to make sure you are purchasing the home for what it’s worth, not overpaying. Your lender also wants to ensure that the value of the home you want to buy supports the dollar amount of the loan they are agreeing to lend you.
The above said, appraisals are just one person’s opinion – that of a licensed appraiser who uses industry standard methods to evaluate and make an educated determination of the value of a home.
And it’s important to know that your mortgage loan amount is based on the sales price of the appraised value, whichever is less.
This scenario is the most ideal.
Fantastic! You’re paying less than the value of the home, which means instant equity.
This may kill the deal. You can try to negotiate the seller down to the purchase price that matches the appraisal. Or you can pay the difference out of pocket. You can also walk away and continue shopping for a home.
It’s up to you and your expert realtor to determine what happens next. I’ve always believed the right home will come at the right time -- even if you had to walk away from a few. It’s important to not let disappointed emotions dictate what you do in this scenario.
In the course of moving toward that all-important final loan approval, you might find yourself getting restless. Just when it appears final approval is coming, you might see an email from the underwriter asking for yet another bank statement, additional documentation showing how you paid off debts, a missing pay stub, or documentation of an asset.
After working so hard to get all the documentation compiled and submitted in the first place, I know this seems even more daunting (and annoying!). Rest assured, this is all part of the process – and it’s all part of the legal lending process! So, while it may be slightly annoying, it’s still do-able.
Once all documentation is submitted, your loan officer will submit your loan for final approval. This could take 24 hours or a few days. It all depends. This is where more patience and deep breaths come in.
Note: It’s very important during this time and throughout the application process that you not allow anyone to pull your credit, that you not make any big purchases, or run up your credit cards. Opening a new credit account can drop your credit score. And major purchases can negatively affect your debt-to-income ratio, which is what lenders base your pre-approval amount on.
You’re almost there!
Once certain items have been approved by the underwriter - usually the title fees, escrow fees, appraisal, and income verification - a closing disclosure, or CD, is issued.
This is an important document and one that needs to be reviewed carefully by you and your loan officer. Your CD is a summary of your loan and the itemized costs. Your loan officer can answer your questions about each line item and help you understand what each item means.
There is a 3-day ‘cooling off’ period between the time you receive the CD and your closing date. This gives you time to review the document, understand the document, fix any issues, ask for additional time to fix problems, and determine if you will still move forward with the purchase.
Here’s a fantastic closing disclosure explainer tool from the Consumer Financial Protection Bureau you can use to familiarize yourself with this document.
Receiving the ‘Clear To Close’ means you’re ready to close and make that home your own! But not so fast. There are a few things that must happen first and in careful coordination.
Before your lender sends the closing documents, we balance the CD to make sure everything is correct between your lender and your Escrow/title company. Once we balance it and approve the closing documents, they are sent to your escrow/title company for signatures.
Your funds will be requested during this time period to ensure that your funds are at the title company when the lender’s funds arrive. Once you sign your documents and the seller has signed their documents, the escrow/title company will scan them back to the lender and order the wire of the funds.
Once the closing documents are received by the lender, they might have some funding conditions or they might not. Once the lender gives you the final OK, the wire is sent to the escrow/title company. When they receive the wire, the title company will release the deed of trust and other recording documents to your county’s recorder. Once the deed of trust for your home is recorded, you are officially the owner of the home and you get your keys!
Depending on which state you live in, the deed of trust can be recorded electronically. Some states require the documents to be recorded in person. It all depends on the practices in your county or your state.
You’re officially a homeowner now!
Take those keys and jump over the threshold!
I did and I’m so glad! I’d love to help you do the same.
This all seems simple, right? Can you hear me laughing? That’s what a good mortgage broker is for. I help ensure that your loan application, approval, and closing process runs smoothly.
With all of my clients, I’m just a phone call, email, or text away and I always make sure to communicate where the loan application process stands, so there is no wondering and no frustrations.
The mortgage process IS actually simple.
But only if you have the right players on your team. I’d love to be one of your players, working hard to help you secure the right loan for the home of your dreams!
Contact me at 480-313-7103 or email@example.com to get started.