Denver CO First Time Home Buyer Series – The Loan Process and What to Expect (Part 9)

Here we are back at home loans which we talked about previously and are coming full circle. We are getting near the end of this series. There will be one more installment. Is every little detail covered? There may have been a few which were missed. However should you have questions, it is an easy thing to pick up the phone, call me and ask.

At this point you should have an executed agreement for the purchase of the home you have been dreaming of owning. You already have been pre-qualified and now is the time to work with the lender to complete the underwriting process. If you have not decided upon a lender at this point you should hope that the seller will agree to extend the closing.

A few of the finishing touches you will need to make on financing are:

Submit any remaining documentation to the lender. If you are only pre-qualified and not pre-approved you will still need to make sure that the lender has 2 months worth of recent pay stubs, 2 years of tax forms and W2 forms, documentation (statements) for all financial accounts and assets. These are essential in the process to ensure you have a smooth closing.

Locking in the rate:

Interest rates not only fluctuate daily, they also fluctuate throughout the day. Much like a stock’s value can change on a moment notice, so can the rate of interest for a mortgage. Clients will ask my opinion on where the rates are going, but the truth is that neither I nor anyone else can accurately predict what the future holds. Look at what you have today and ask yourself if you are happy with what you have. If you’re happy then lock in the rate and be happy. In the future the rate could go up just as easily as it could go down.

Property Insurance:

As previously stated the lender will require that insurance is carried on the property that is being purchased with the loan. Call your preferred insurance provider and let them know you are purchasing your first home, also be prepared and give them your lenders contact information. Then give your lender the insurance agents contact information. They will take it from there.

In general you should now be in good shape. On occasion there is additional documentation that the underwriter requires, so be prepared to provide it quickly. Delays could delay your closing.

Upon receipt of the contract by the lender, they will contact the title company processing the closing in order to get a title commitment. The lender will also take care of ordering an appraisal on the property, but will wait to do so until the inspection is out of the way. Once a complete packet is together the lender will send the file to underwriting for processing and to obtain a clear to close.

Understand that underwriting is not complete until you hear the words – clear to close – from the lender. Prior to the clear to close be prepared to provide the lender with any additional documentation required for underwriting. In today’s lending environment it is becoming commonplace for the underwriter to request additional documentation of some kind prior to approval.

Next up in the Denver CO First Time Home Buyer Series – The Closing Table (Part 10)