So, after being pre-approved, you finally found that perfect house that you want to make your HOME. Now what happens? Here is what you can expect from the moment your offer is accepted to the day of closing:
Step 1: Once your offer has been accepted, make sure your loan officer (LO) receives a copy of your purchase agreement ASAP…whether you personally deliver it or your realtor sends it via email. Under normal circumstances, it’s at this point that you can choose to lock your interest rate. Your LO will then prepare your “early disclosures”
Step 2: Delivery of early disclosures - if at all possible, it is best to meet face-to-face with your LO to go over these disclosures. For one, there are a LOT of disclosures with several places to sign & date. But more importantly, there is a lot of info that can be somewhat overwhelming. Meeting face-to-face gives the LO the chance to explain everything in an easy-to-understand manner, and it gives you the opportunity to ask questions. This is also the time for you to provide the LO with any updated or missing documentation that was requested in the pre-approval stage.
Step 3: Insurance – At this point you should start shopping around for Homeowners Insurance (HOI). It’s a good idea to get at least 2-3 quotes from insurance companies/agents. Once you make a decision on which insurance company you intend to use, make sure that your Loan Officer receives a copy of that quote as soon as possible. TIP: most insurance companies offer multi-policy discounts…so ask them to give you quotes for both auto & homeowners. It may be worth switching your auto coverage at this time
Step 4: Appraisal order – Your lender will be ordering your appraisal shortly after delivering your early disclosures to you. If you are having an inspection done on the house, your lender will work with you on the timing of the appraisal order.
Step 5: Processing – at this point it may feel like nothing is happening with your loan because you may not hear anything from the lender for a few days, but that couldn’t be further from the reality. Processors are working diligently on your file, obtaining things like title work, flood certifications, tax transcripts, verifications of employment, etc. But before you know it, your appraisal will come in…and then things REALLY pick up steam!
Step 6: Delivery of appraisal – your lender will provide you with a copy of your appraisal in either digital or hardcopy format. They will also ask you to sign a receipt acknowledging that you received the appraisal.
Step 7: Underwriting – once you have received your appraisal, your file will soon go to Underwriting. This is where your file is reviewed one last time to make sure that it meets all lending requirements. It generally takes about 24-48 hours for this step. Ultimately your file will be given the “clear to close”. This is music to EVERYONE’S ears!
Step 8: Scheduling of Closing – your lender will work with you, the realtors & title company to schedule your closing.
Step 9: Delivery of Closing Disclosure – lending regulations require lenders to provide borrowers with a Closing Disclosure (CD) at least three business days prior to closing. The CD is a five-page form that provides final details about your mortgage loan, your monthly payments and how much you will pay in fees. The three-day requirement is in place so that the borrower has ample opportunity to review it and ask questions
Step 10: Funds to close – if the amount you need to bring to closing is under $10,000, then you are allowed to bring a cashiers check to the closing. If the amount you need to bring is greater than $10,000 then you are legally required to wire your funds to the title company. Your lender will help you with either scenario. In general, you will want to obtain your cashiers check or initiate your wire transfer about 24 prior to your closing.
FINAL STEP: CLOSING – Yay! You made it to closing day! You will want to arrive at the title company about 5-10 minutes prior to your scheduled closing. At this time they will ask to make a copy of your drivers license (don’t forget it!). Then a representative from the title company known as a “closer” will sit down with you and go over all of your loan documents.
It is important to note that all lenders will go through all of the same steps, but the order in which they occur may differ slightly from one lender to the next. But generally speaking, the above steps will give you a good idea what to expect during your loan process.
About the Author:
Dirk Webster has been helping people get into their home throughout his career. He started in banking as a summer intern in 1989 and hasn't looked back. The part of Dirk's job that he values the most is the relationships he's able to form with customers.
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