Mortgage Documents Can Be Daunting
It's easy to be overwhelmed by the amount of paper work involved in buying a home. Having the help of a housing professional is almost essential to navigating the process. Notarized documentation is routinely the basis for a house purchase, so be prepared to sign and sign. Many federal and state regulations also are involved and good advice is invaluable unless you are an expert yourself.
The uniform residential loan application is where you begin. This document includes several sections that ask for information about you, your financial status and the details of the purchase you are planning.
You must provide your Social Security Number, date of birth, marital status and contact information. If the home will be jointly owned, the information for both parties is necessary. Have proof ready for your income, expenses, assets and liabilities. If there are any pending legal problems or any other factors that will affect your finances in the near future, you will be required to include that information.
The potential lender will generate a credit report. If you know of any irregularities in that report, resolve them before you seek a mortgage loan. You can ask for copies of your credit ratings from the three most commonly used rating agencies that might be helpful ahead of time.The factors that will count include whether you have outstanding debt that is not addressed, how prompt you are in making payments and your debt-to-income ratio. Regular and prompt payment of your bills is a sign to the potential mortgagor that you are a good risk.
The lender also will require detailed information about the property you propose purchasing, including its address, the year it was built and a legal description.
A pre-approval letter spells out the potential cost of the loan. It is a conditional commitment. Study it and be sure you can live comfortably with the proposed terms.
A good faith document outlines the costs of the loan, which can include a credit report fee, appraisal, title search fee to assure there are no outstanding liens or debts recorded against the property, the recording fee, and how much you must have in reserve at closing, including the down payment and closing costs.
A truth in lending document must include total costs and the details of the monthly payment, annual percentage rate including the interest rate, points, broker's fee and other charges.
Most lenders will send the local Mobile Notary to your location to sign all the documents. If your writing fingers are still in shape, there are some final details, a deed of trust that allows the lender to hold your property as security in the event you fail to meet the terms. They can take it back if you don't pay as promised and resell it. Finally, you receive a copy of the deed along with the rest of the documents at the signing.
Simple, right. Now go out and find that dream home.