For The First Time Home Buyer - Key Documents provided during the Loan Process

Buying a home is a legal and financial transaction......Yes that's right!!  You've got to prepare to review and sign a lot of documents. Review and signing documents during the loan process is just the start........but that's easy right?

One of the first document you will be given by the Lender is what is called  'The Good Faith Estimate".  This is a breakdown of what you are expected to pay when you close on the transaction to purchase you home.  Now note that this is an estimate.  The amount you really pay at closing can be slightly different.....But don't worry ...you will get the specific figure closer to closing of your loan.   The estimate will include -  appraisal fee, title search, title insurance, fees for a survey if you need one, recording fees, attorney fees among others.

Then there is the "Truth in Lending Disclosure " .  The Truth in Lending Disclosure required lenders to disclose "cost" of borrowing.  This document clearly states the Annual Percentage Rate (APR).......This document is  a form of consumer protection......The APR is intended to make it easier for consumers to  compare lenders and loan options.  We've got you covered ......complete disclosure....don't worry!!! 

You've decided on the best type of loan for you.....what's next......  You'll want to know the interest rate available on that loan.   The higher the interest rate the more your monthly principal and interest payments.
Once you have decided on the rate ...have your lender lock it....so that  you are guaranteed this rate for a certain period of time.......Better be enough time for you to close the deal so you can move into your house!!!!

For the First Time Homebuyer - The key People in the Loan Approval Process

Now that you are pre-approved for a loan...did you know that there are several people who work hard to assist you with this approval process.   It is not just the Loan Officer.

There is the LOAN PROCESSOR.....who makes sure that all the correct steps are taken, such as ordering the credit report, the appraisal, and compiling all the necessary documents needed for the file.

Let me tell you....it's good to know this person because he or she will be a valuable source to provide information to you  about the status of your loan and can answer some of the questions you may have regarding the appraisal or about your good faith estimates.

Then there is the LOAN UNDERWRITER...who actually gives final approval of the loan.  This is the person who gives the all clear that the loan has been approved.

I know what you are thinking.....what happens next?   what papers do I need to sign?.....Don't worry I'll keep you posted!

For The First Time Home Buyer - Lender says you are Pre-approved for a Loan!!!

So you took care of all the red flags ...the Lender is satisfied and the lender says you are PRE-APPROVED for a  certain loan amount.  What does this mean? 

It means that based on the information you provided you can now purchase a home up to a certain amount, whether $100,000, $250,000, $500,000.  I know, I know you are excited because you can buy a house for a certain amount, even more than you thought, yeah!!!!

Also your pre-approval can be a great negotiating tool when you make an offer on a property........

Now ....let me ...say here, that  just because the lender said you were approved for  more than you even thought.... that you have to go out and purchase a property for that total amount....now don't go spending more than you want to.

You can ask the Lender to  give you a pre-approval  letter for the amount you feel comfortable borrowing for a house.  

Once the loan application is signed, the lender has 72 hours to provide a Good Faith Estimate...this is required by Law.    This is just an estimate ...and it will let you know how much money will be required for closing the loan..once you purchased a property ...and what your monthly mortgage payments would be like...


The good faith estimate will also include costs for the appraisal, title search, title insurance, recording fees, attorney fees, loan origination fees.

I know...I know....you are thinking there you go again with all these different terms....don't worry I will let you know  what each of these terms mean, when you will use them throughout the process.....Don't worry....I have got your back.......will tell you more soon...!!!!!

For The First Time Home Buyer : Possible Issues That can Affect Your Loan Application Process

Now you are making your loan application and the lender runs your credit report and ........red flag...there is an issue with your credit..... Even though you know your credit score and lender said in the beginning they could work with you, there are some items on your credit that MUST be removed before you can get a mortgage loan.

****Do you have defaulted student loans?  Sorry..... but  you must bring these loans current  before you can get a mortgage loan. 


***If you are in arrears with your child support payments and it is reported on your credit history...You must bring the delinquent payment current into order to proceed with the loan application.


****It could also be that an account that you have paid off is still showing  a balance......Don't panic!!!
If this is the case then just check the 'date last reported' and 'date of last activity' to make certain that the information has been updated..... 


I know, I know you hate keeping all these papers around......But it is very important that you retain all paperwork regarding transactions and payment history.....You never know when you will need them!!!

Here's another tip ____ always keep the original copies of receipts  and other documents......Don't give them out....make copies.

I know.....you are thinking 'hey I know that, this is elementary'   Yeah, but sometime we forget......Just a gentle reminder.....Not trying to be your Mom!!!

Ha!! More tips coming soon!!!

For the First Time Homebuyer: Lender Jargon

So you have met with the Lender and you have asked the right questions......The Lender answers and you are like what?....say what???   He or she  starts throwing all these terms at you. 
Here are some common terms that will help you understand :-

Pre-qualification for a loan-  Pre-qualification  is an estimate of your purchasing power and can be done with a verbal statement.

Pre-approval for a loan is done by the Lender . You will have to complete a mortgage loan application,  provide recent pay stubs, bank statements  and any other supporting document your lender requires.

APR or Annual Percentage Rate - This is the finance charge expressed as an annual rate.

GFE or Good Faith Estimate - this is an estimate of your closing costs when you are purchasing a house.

PITI or Principal, Interests, Taxes (real estate) and Insurance.
* Principal - the original balance of money lent, excluding interest
* Interest - the amount a lender charges to borrow money, expressed as a percentage
* Taxes - real estate tax assessed by city or county
* Insurance - includes homeowner/hazard insurance and any mortgage insurance



Now you know....not so intimidating as you thought ....ha!!!  

For the First time Home Buyer: Questions for the Lender

So you decide to purchase the home....One of the first thing you need to do is to meet with a Lender to determine how much home you can buy....
You have an appointment to meet with the Lender....then you wonder what are some of the questions I ask?
"OMG ....I have a brain freeze!!"   Do you ...then let me help you out..here are some questions you can ask

What types of loans do your offer?  Fixed Rate or adjustable rate? 
What is your current  interest rate for a  30 year fixed rate loan?
Does the loan require mortgage insurance premium or  private mortgage insurance?
Can you lock in the rate?

For the first time Home Buyer: PURCHASE THE HOUSE FIRST!!!

Purchases made on credit, even those that have terms such as "one year, no payments, or no interest, WILL affect your credit score and debt-to income ratio - (factors which the Lender use to determine how much house you can afford).

In addition most lenders are required to track or review your credit behavior after you've been approved for a mortgage but haven't yet gone to closing.    So no major purchases before you close on your loan to purchase the house.

Even after you have purchased your home....wait for at least 12 months to make major purchases.  Get accustomed to your new expenses as a HOMEOWNER first!!!!