Only after you sign a purchase contract do you formally apply for a mortgage loan on the specific home you have selected. The potential lender usually approves or turns down this request within a few days. When you apply for a mortgage, the lender must give you a good-faith estimate of all the costs associated with the loan, including the annual percentage rate, application and processing fees, and any other charges that must be paid when the deal is legally consummated. The exact interest rate on your mortgage may be the current rate at the time of application or the rate in force at the time of closing. If you expect rates to rise between the time you apply for the loan and the actual closing, you may wish to pay a small fee to obtain a mortgage lock-in. This agreement includes a lender’s promise to hold a certain interest rate for a specified period of time, such as 60 days. It may be part of, but is not the same as, a loan commitment (or loan preapproval), which is a lender’s promise to grant a loan.
Prepare for the Closing
After you have obtained a mortgage, you are not yet finished. Of course, you will want to do all the usual tasks associated with moving; giving notification of your change of address, hiring a moving company (or not), getting your utilities shut off at your old residence and on at your new are examples. But there are two very important steps that can save you thousands of dollars and many headaches.
Hire Your Own Inspector
Prepare for the Closing
After you have obtained a mortgage, you are not yet finished. Of course, you will want to do all the usual tasks associated with moving; giving notification of your change of address, hiring a moving company (or not), getting your utilities shut off at your old residence and on at your new are examples. But there are two very important steps that can save you thousands of dollars and many headaches.
Hire Your Own Inspector
Recall that you should always have a contingency clause included in your purchase contract so that you can back out of the deal if the house fails to pass the home inspection. The inspector should look for termite infestation, wood rot, and radon gas as well as examine the general condition of the home, including heating/cooling, plumbing, and electrical. You should pay the inspector yourself and should not choose one based on the recommendation of the seller’s real estate agent. You want an independent person who is well qualified to look out for your interests. If the inspector finds problems, you can negotiate with the seller for an adjustment in the purchase price of the home or, in severe cases, use the contingency clause to back out of the deal. Do not allow the seller to arrange the repair as the seller will likely settle for the cheapest and quickest solution, not necessarily the one that adequately repairs the problem.
Hire an Attorney
Hire an Attorney
The good-faith estimate that you receive is a legal document outlining your entire up-front and monthly home-buying costs. Hiring an attorney to go over the estimate and your purchase contract to ensure that everything is in order is money well spent. Many of the closing costs are negotiable, and your attorney can advise on how to keep these costs to a minimum.
Sign Your Name on Closing Day
To complete the sale, the buyer, the seller, and their chosen representatives generally gather in the lender’s office for the closing. At the closing, all required documents are signed and payments are made. A key document is the uniform settlement statement, which lists all of the costs and fees to be paid at the closing. You have the right to see this statement one business day before the closing so that you can avoid surprises and can compare the fees with the good-faith estimate provided earlier. Challenge all discrepancies.
Sign Your Name on Closing Day
To complete the sale, the buyer, the seller, and their chosen representatives generally gather in the lender’s office for the closing. At the closing, all required documents are signed and payments are made. A key document is the uniform settlement statement, which lists all of the costs and fees to be paid at the closing. You have the right to see this statement one business day before the closing so that you can avoid surprises and can compare the fees with the good-faith estimate provided earlier. Challenge all discrepancies.
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