FINANCING

Once you are set on the purchase of your home and the contract has been approved by the seller, you must then forward the contract to your lender who will schedule an Appraisal of the house. The Appraisal usually does not take a long time and will determine the value of the house based on comparisons in the area. You should also schedule your Home Inspection. If you are using a Licensed Real Estate Agent, ask them to do this for you.

Your responsibility is to schedule the real estate inspection and get your financing situation in order. It is the responsibility of the lender to schedule the Appraisal.

The seller will have the responsibility of ordering a Title Commitment and a Survey. If the property is a condominium, no Survey is required. You are entitled to a copy of the Title Commitment and Survey prior to Closing, for review. In some cases you may be using an attorney, so your attorney will get the Title Commitment and be able to review it for you.
Your Real Estate Agent cannot act as your attorney and review your title for you as an attorney would. Neither can your lender. When you go to the Closing (usually held at a title company) , the escrow officer who facilitates your closing cannot give you any legal advice or explain any documents to you. If you are unsure about signing documents, you should hire an attorney.
You should be aware, however, that if you are getting a mortgage, your lender will review the title commitment and survey and make sure that everything is in good shape before proceeding. Your lender has just as much on the line as you do when it comes to the deal. In some cases, they may have more.

To get your financing set, you will need to provide your lender with documentation about the money that you are planning to use for a down payment. This entails a bank statement. If the money is a loan from a family member, you need to provide a gift letter stating that the money is a gift and they do not want to be paid back.

You are also going to need two year’s worth of tax returns and recent pay stubs for any and all income you are claiming towards your loan. In other words, you have to prove that you can afford to buy the house and pay for it.

You will also need employment verification. This means a letter from your employer stating that you work at the company and should be there for the next 12 months. This is a pre-set form that your employer completes and faxes back to the loan company.

Depending on the lender, you will need three to six months worth of bank statements. A computer print out is fine. This should reflect your income and bills.

If you are going through with a “no doc,” this means you will not need employment verification, bank statements or tax returns. The lender will still run a credit check. If you have items on your credit report that need explanations, you will have to provide the lender with written letters or documentation. If there is something on your credit that does not belong to you, you will have to sign an affidavit that states this is not your item and show proof of a dispute with the Credit Bureau.

Let’s just say for instance, you recently deposited $10,000 into your bank account; the lender is going to want to know where that money came from. Lenders are getting very strict, especially when it comes to large sums of cash being deposited into a bank account. This is partly due to new regulation passed with the Patriot Act.

Once the lender has all of the paperwork, they will submit your file to Underwriting and you will get a formal approval. If you have been pre-approved, this means that you have submitted all of the paperwork and they only need the Appraisal, Title Commitment and Contract before they will issue a Formal Approval. Once you have been formally approved by the lender, you are ready to Close.

Until next time…
Take care of yourself, and those around you!

TX Veteran,
REALTOR ROB

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