WHAT TO EXPECT

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A Loan Estimate is a form that you receive after applying for a mortgage. The form provides you with important information, including the estimated interest rate, monthly payment,  and total closing costs for the loan. The Loan Estimate also gives you information about the estimated costs of taxes and insurance, and how the interest rate and payments may change in the future. In addition, the form indicates if the loan has special features that you will want to be aware of.   When you receive a Loan Estimate, the lender has not yet approved or denied your loan application. 

The Loan Estimate shows you what loan terms the lender expects to offer if you decide to to move forward, the lender will ask you for additional financial information.

Generally, I use "E" documents so that you can electronically sign your Loan Estimate and other necessary documents. These may flow into your email from an address that looks like:  eFolder@elliemae.com.   This is the path you will use for electronically signing your documents!   

In order to process your loan application, it is necessary to get an appraisal of the property.  You likely will be asked to pay for the appraisal at the time you approve your Loan Estimate.  If the loan is approved, you will receive credit for this prepayment at closing. 

Be sure to submit all requested documentation as soon as possible! We don't want any delays in your process.

Work with your real estate agent, if you have one, or if purchasing without an agent consider this carefully.  A home inspection is an added expense that some first-time homebuyers don’t expect and might feel safe declining, but professional inspectors often notice things most of us don’t. This step is especially important if you’re buying an existing home as opposed to a newly constructed home, which might come with a builder’s warranty. If the home needs big repairs you can’t see, an inspection helps you negotiate with the current homeowner to have the issues fixed before closing or adjust the price accordingly so you have extra funds to address the repairs once you own the home.

During the inspection, be sure to ask questions and bring a checklist of things you want information on. Note that a comprehensive inspection should not only bring defects and problem areas to your attention, it should also highlight the positive aspects of a home as well. When you receive the final report, prioritize the issues and decide whether you want to negotiate those items with the sellers. Remember: Every deal is different and negotiable. 

This is needed before the loan can receive final approval.

1. Know about exclusions to coverage. For example, most insurance policies do not cover flood or earthquake damage as a standard item. These types of coverage must be bought separately.
2. Know about dollar limitations on claims. Even if you’re covered for a risk, there may be a limit to how much the insurer will pay. For example, many policies limit the amount paid for stolen jewelry unless items are insured separately.
3. Know the replacement cost. If your home is destroyed, you’ll receive money to replace it only to the maximum of your coverage, so be sure your insurance is sufficient. This means that if your home is insured for $150,000 and it costs $180,000 to replace it, you’ll only receive $150,000.
4. Know the actual cash value. If you choose not to replace your home when it’s destroyed, you’ll receive the replacement cost, less depreciation. This is called actual cash value.
5. Know the liability. Your homeowner’s insurance will generally cover you for accidents that happen to other people on your property, including medical care, court costs and awards by the court. However, there’s usually an upper limit to the amount of coverage provided – be sure your coverage is sufficient if you have significant assets.

Know what’s happening behind the scenes: A home appraisal to ensure that the value of the home you’re buying is in line with the purchase price will be ordered.  The appraiser will visit the home and compare it to other recently sold homes in a similar price range. A title search to make sure there are no outstanding liens on the property as well as to arrange for a smooth closing process.

While your loan is in process, avoid opening new credit cards or making other major financial changes. New loans or other changes that affect your debt-to-income ratio could get in the way of your mortgage approval.  Resist the temptation to buy new things for your new home until after your loan is approved and closed!

A Closing Disclosure is a form that provides final details about the mortgage loan you have selected. It includes the loan terms, your projected monthly payments, and how much you will pay in fees and other costs to get your mortgage (closing costs). 

You will get this at least three business days before you close on the mortgage loan. This three-day window allows you time to compare your final terms and costs to those estimated in the Loan Estimate that you previously received from the lender. The three days also gives you time to ask your lender any questions before you go to the closing table.

The three-day window is required and cannot be waived.

You’ll need to get a cashier’s check or arrange to wire money to cover your down payment and closing costs.