Ready To Buy A Home

Who’s Who In The Transaction

Life Of A Purchase & Sales Transaction

Title Insurance

What is Escrow

Inspection Process

Who Pays What?

Financing

The Loan Process

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Financing

GETTING PRE-QUALIFIED Once you have an idea of the type and size home you want and the area you’d like to look in, you should be pre-qualified by a Lender. By doing this before looking for a home, you’ll save yourself time, energy and frustration because pre-qualification can:

DETERMINE HOW MUCH HOME YOU CAN AFFORD Pre-qualification helps you avoid buying less home than you can afford or being disappointed if you don’t qualify for as much as you had hoped.

SHOW WHAT YOUR TOTAL INVESTMENT WILL BE You’ll know approximately how much money you’ll need for down payment and closing costs. Inform you of your monthly payments . You’ll have a close estimate of your monthly principal, interest, taxes and insurance (PIT).

IDENTIFY THE LOAN PROGRAMS YOU CAN QUALIFY FOR With the wide variety of loan programs available, it is important to know which types you qualify for and which will best suit your needs.

STRENGTHEN YOUR OFFER Sellers are more inclined to accept realistic offers when they know that you have taken the time to be interviewed by a Lender and can probably qualify for the loan.

At this point, your Lender can also help you determine alternatives and strategies that could help you buy the home of your dreams. Some examples include:

  • Special first – time homebuyer program.
  • Co-mortgage financing.
  • Debt consolidation counseling.

 

CLOSING COSTS Below is an overview of the types of closing costs you may incur on your loan. Some are one-time fees while others recur over the life of the loan. When you apply for your loan, you will receive a Good Faith Estimate of settlement charges and a booklet explaining these costs in detail.

LOAN ORIGINATION FEE This fee covers the Lender’s administrative costs in processing the loan. It is a one-time fee and is generally expressed as a percentage of the loan amount.

LOAN DISCOUNT Often called “Points”, a loan discount is a one-time charge used to adjust the yield on the loan to what market conditions demand. One point is equal to 1% of the loan amount.

APPRAISAL FEE This is a one-time fee that pays for an appraisal, a statement of property value required on most loans. The appraisal is made by an independent appraiser.

CREDIT REPORT FEE This one-time fee covers the cost of the credit report which is processed by an independent credit reporting agency.

TITLE INSURANCE FEES There are two title policies; a Buyer’s title policy (which protects the new homeowner) and a Lender’s title policy (which protects the Lender against loss due to a defect in the title). These are both one-time fees.

MISCELLANEOUS TITLE CHARGES The title company may charge fees for a title search, title examination, document preparation, notary fees, recording fees and a settlement or closing fee. These are all one-time charges.

DOCUMENT PREPARATION FEE There may be a separate, one-time fee that covers preparation of the final legal papers, including the note and deed of trust.

PREPAID INTEREST Depending on the day of the month your loan closes, this charge may vary from a full onth to just a few days interest. If your loan closes at the beginning of the month, you will probably have to pay the maximum amount. If your loan closes near the end of the month, you will only have to pay a few days interest. Your first payment will usually be 30 days after the date pre-paid interest is paid through.

MORTGAGE INSURANCE MI PREMIUM Depending on the amount of your down payment, you may be required to pay a fee for mortgage insurance (which protects the Lender against loss due to foreclosure). You may also be required to put a certain amount for MI into a special reserve account (called an impound account) held by the Lender.