The Final Chapter of My Trusted Homebuying Road Map

Dec 13

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. Here are parts one and two. This month, I share my fairytale ending: My last steps to purchasing the home of my dreams!

Surviving the Appraisal

Nothing initiates nail-biting tendencies like a pending appraisal on a beloved home! And this is what happens after the inspection phase is completed. The appraisal assesses the home's value based on recent sales and comparable conditions of similar homes near it.

Appraisals are vital to the loan process. After all, it is essential to make sure the home is purchased for what it's worth, but not above that amount. The lender also wants to verify that the value of the home to be bought supports the dollar amount of the loan they are agreeing to lend.

As mentioned above, appraisals are just one person's opinion—that of a licensed appraiser who uses industry-standard methods to evaluate and determine a home's value. It's important to know that the mortgage loan amount is based on the sales price or appraised value, whichever is less.

It is ideal if the appraisal comes in at the purchase price. If the appraisal exceeds the purchase price, that's fantastic! That's less than the home's value, which means instant equity. If the appraisal comes under the purchase price, it might kill the deal. It is possible to negotiate with the seller down to the purchase price that matches the appraisal, pay the difference out of pocket, or walk away and continue shopping for a home.

It's up to the expert realtor to determine what happens next. I've always believed the right home will come at the right time. It's important not to let disappointed emotions dictate actions in this scenario.

Moving Toward Loan Approval

It's hard not to get restless while moving toward that all-important final loan approval. Just when final approval is coming, the underwriter may email asking for yet another bank statement, additional documentation showing how debts were paid off, a missing pay stub, or documentation of an asset.

After working so hard to compile and submit all the documentation in the first place, I know this seems even more daunting (and annoying!). But 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 doable. Once all documentation is submitted, the loan officer will submit the loan for final approval. This could take twenty-four hours or a few days. It all depends.

Note: It's very important during this time and throughout the application process that no one should be allowed to pull a credit report, make any big purchases, or run up credit cards. Opening a new credit account can drop a credit score. Major purchases can negatively affect your debt-to-income ratio, which lenders base the pre-approval amount on.

Receiving the CD – The Closing Disclosure

Once the underwriter has approved certain items —usually the title fees, escrow fees, appraisal, and income verification—a closing disclosure, or CD, is issued. This is an important document that needs to be reviewed carefully by the client and the loan officer. A CD is a summary of the loan and the itemized costs. The loan officer can answer questions about each line item and help understand what each item means.

There is a three-day 'cooling-off' period between receiving the CD and the closing date. This gives clients time to review the document, understand it, fix any issues, ask for additional time to fix problems and determine whether they will still proceed with the purchase. Here's a fantastic closing disclosure explainer tool from the Consumer Financial Protection Bureau that can be used to familiarize oneself with this document.

Clear To Close!

Receiving the 'Clear To Close' means the client is ready to close and make that home their own! But not so fast. There are a few things that must happen first and in careful coordination. Before the lender sends the closing documents, we balance the CD to make sure everything is correct between the lender and their escrow/title company. Once we balance it and approve the closing documents, they are sent to the escrow/title company for signatures.

Funds will be requested during this period to verify that they arrive at the title company when the lender's funds arrive. The buyer and the seller sign the documents, and then the escrow/title company scans them back to the lender and orders the wire of the funds.

Once the lender receives the closing documents, they might have some funding conditions, or they might not. Once the lender gives the final okay, 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 the county's recorder. Once the deed of trust for the client's home is recorded, they are officially the homeowner and get their keys!

The deed of trust can be recorded electronically, depending on the client's state. Some states require the documents to be recorded in person. It all depends on the practices in their county or their state. Give us a call when ready to get pre-approved! This all seems simple, right? That's what a good mortgage broker is for. We help guarantee a smooth loan application, approval, and closing process. With all of our clients, we're just a phone call, email, or text away, and they always communicate where the loan application process stands, so there is no wondering and no frustration.

The mortgage process is simple—but only if the right players are on the right team. We'd love to be one of the players, working hard to help them secure the right loan for the home of their dreams!

* Specific loan program availability and requirements may vary. Don't hesitate to contact the mortgage advisor for more information.

As a licensed mortgage broker, mindful money has been helping residents in Arizona, California, and Colorado with top-notch conventional mortgage, FHA mortgages, and reverse mortgages solutions. We help them navigate the home-buying process smoothly and confidently. Call today for more information.

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