Pre-qualifying for a Mortgage
Prior to your loan application and the start of your search for a new home, it might be prudent to speak with your GuardHill Loan Originator to become pre-qualified for a loan up to a specific loan amount. This can be a very helpful tool, especially involving the potential purchase of a home where there are multiple buyers vying for the same property. A pre-qualification letter gives you the advantage by showing the seller that you have already been pre-qualified for a loan – again, of a specified loan amount, subject only to property approval. The pre-qualification letter immediately gives the seller a comfort level with you by showing him or her that, not only are you serious about purchasing, but more importantly to the seller, there is minimal risk involved by accepting your bid -- You have already been pre-qualified! The seller might have several bids higher than yours but knows nothing about the credit worthiness of the other bidders. It is very possible that, due to the comfort level your pre-qualification letter created for the seller, he or she might accept your lower bid choosing to avoid the risk of accepting a bid from a buyer that might not qualify for a loan of that size.
The Application Process
The mortgage application process can be made easier with a few tips on what to expect. GuardHill will require basic information from you to begin the process. This information usually includes your full name, current address, Social Security Number, employment and asset information, as well as the property address of the home that you are purchasing or refinancing. In addition, upon your written authorization, a credit report will be ordered for each borrower on the loan application. The information derived from this documentation will be used to complete the Uniform Residential Loan Application Form -- which you will be asked to review for accuracy, sign and date.
Your Loan Originator will walk you through a checklist of all of the documentation that you will need to supply to him or her in order to complete your loan application request. Examples of such documentation are a fully executed sales contract, copy of the property deed, recent pay stubs, recent bank statements, etc. Based on your particular mortgage scenario, your Loan Originator will streamline the documentation asking only for the paperwork that is essential in order to receive an approval and Loan Commitment Letter.
Selecting a Mortgage
Based upon your particular scenario, your Loan Originator will explain in detail all of the options pertaining to programs, products and interest rates that are available to you.
| Please see below a sample of just a few of the programs and products available: | |
| Fixed-Rate Mortgages | Interest rates and payments that remain the same for the life of the loan (i.e. 15 Year Fixed, 30 Year Fixed) |
| Adjustable Rate Mortgages (ARMs): | Interest rates that adjust periodically to keep in line with changing market rates. |
| Interest Only Programs: | With these programs, in most cases, you have the option to make interest only payments rather than principal and interest payments for the "fixed" portion of the loan. By delaying paying down principal and choosing to make only interest payments, your monthly payment will be significantly reduced. For example: Payment for the Interest Only Program = $2,395.83 Payment for the Fully Amortizing Program = $2,917.87 By making Interest Only payments you reduce your monthly bill by $522.03 With these types of programs, in most cases, each month you have the choice to make either:
Another feature of most Interest Only Programs is that it allows you to make large lump sum payments which automatically recasts your loan reducing the balance of the mortgage. You will reap the benefit of this the following month after the lump sum payment is made - Your monthly payment is reduced. Generally, the monthly payment is not affected when making large lump sum payments. Though your loan balance is reduced, you are required to continue making the same monthly payment as you did prior to the large payment. |
Unlike years ago, there are many different programs and products to choose from. Today, more than ever, it is imperative that you discuss your options with a professional. He or she will guide you to ensure that you choose the perfect program for your specific needs.
Loan Application Costs
You will be required to pay an application fee and an appraisal fee at the time of application. Depending upon the type of property (co-op, condo, etc.), refinance or purchase, you may incur additional fees (i.e. Lien Search, Assignment of Mortgage, Building Financials, etc.) during the process. Your Loan Originator will discuss all possible additional costs at the beginning of the process.
After the Loan Interview: Next Steps
Once you've met with or talked with your GuardHill Loan Originator and submitted a loan application, your Loan Originator will run a credit report on yourself and any co-borrowers. Your Loan Originator along with your Processor will review your application to ensure that the information is correct. They will also order an appraisal of the property.
After the Loan Interview: Verification
As part of the loan application process, your GuardHill Loan Originator will verify your employment history and review the balances and activities in your asset accounts. Forms are typically sent to your employer requesting your job history. Financial institutions that you have accounts with are asked about your current assets.
If you are renting, your Loan Originator and Processor will send a "Rental Verification" form to your landlord for information regarding your rent payment history.
If you currently have a mortgage, your GuardHill Team will send a "Request for Mortgage History Rating" to your current mortgage lender. This document seeks information on your mortgage payment history.
After Your Loan Interview: Qualification
Your GuardHill Loan Originator will make sure you are qualified for the loan you are seeking. You can help speed the loan process by responding quickly and accurately to any questions your GuardHill Team has. It is important to be honest regarding any problems you may have had with your credit or with other loans.
You may want to contact your present and previous employers to alert them that you're applying for a mortgage and inform them that they may be asked to provide documents to your lender. Your GuardHill Team will contact you periodically to review the status of your loan application.
When your loan submission has been approved, your GuardHill Team will contact you to let you know that a "Commitment Letter" has been issued. Commitment Letters are the official approval of your loan and generally have what are termed "Conditions" that must be satisfied in order for the Commitment Letter to be considered in "Full Effect". Conditions can be anything such as an explanation of a credit inquiry on your credit report. Explanation of a large deposit or withdrawal on you bank statement, etc. Once all conditions have been satisfied your loan will then proceed to closing.
About Your Closing
Once the mortgage financing is in place, your GuardHill Team will coordinate all the necessary steps to prepare the file for closing. Your primary role at the closing is to review and sign documents related to the mortgage loan as well as pay the closing costs.
Each transaction is different. In some transactions, closing costs might be rolled into the mortgage (Increasing it somewhat). The seller or the builder of the home may pay some or all of the closing costs.
Closings vary from state to state, some, even within the same county or city. Certain activities are standard, and it is to everyone's benefit that you understand the procedures involved.
Many of the people involved with a home purchase may be at the closing -- such as the seller, the real estate agents, and closing agent/attorney (who manages the paperwork and disburses funds). If you live in an area of the country where there is no formal closing gathering, an escrow agent processes the paperwork, arranges for the documents to be signed, and collects and disburses the required funds.
Preparing for Closing
Several important steps need to have taken place prior to the closing. Some of these steps include obtaining a title search, title insurance, and survey of the property. Your GuardHill Team can and will assist you in coordinating and completing all of these tasks.The attorney, closing or settlement agent will coordinate closing-related activities such as preparing and recording the closing documents and disbursing funds. Closings are conducted differently across the country, depending on the property location. Your GuardHill Team will explain to you how your particular transaction will be conducted.
Closing Costs
Many of the closing costs and terms that you will see on your HUD-1 Settlement Statement (This is the definitive statement that breaks down all of the costs related to your transaction) should be familiar to you as your GuardHill Team submitted to you at the beginning of the process a form called the "Good Faith Estimate of Closing Costs". As the form heading states it is an estimate of the costs that you will incur by closing this loan.
A few of the terms are:
- loan origination fee
- loan discount points
- appraisal fee
- prepaid interest
- escrow accounts
To ensure that you are totally prepared at the closing table, your GuardHill Team will review all of the costs with you, prior to the actual closing.
Closing Date
Upon the satisfaction of all of the conditions of the Commitment Letter your transaction will receive what is called the "Clear to Close". Your GuardHill Team will let you know as soon as that is given.
Typically, your GuardHill Loan Originator, and/or your closing agent (usually involving a purchase) will coordinate the setting of this date. Your GuardHill Team will advise as to when the loan must close by in order to either meet a contract contingency and/or Interest Rate expiration.
Your GuardHill Team will coordinate and advise you of the date, place, and time of the closing as well as the items you will need to bring.
At Your Closing
At or after the closing, you should receive the original or copies of the following:
- HUD-1 Settlement Statement -- This document itemizes the funds the buyer and the seller will pay at closing.
- Note -- Often called the "Promissory Note", it represents your promise to pay the lender according to the agreed upon terms of the loan, including when and where to send your payment.
- Affidavits -- A written declaration made under oath before an authorized official, you'll sign various affidavits at your closing verifying information such as your address, place of employment, checking account number, and more.
- Deed -- In purchase transactions this document transfers ownership from the seller to you.
When you file your taxes, it may be useful to have a copy of the settlement form as it lists the real estate taxes and points you may have paid at the closing -- they may be tax deductible. Also make sure you keep all homeowner's insurance and title insurance records. You may need to access them if you discover a flaw in the title after the purchase of a home.
After Your Closing
Unlike other companies, your GuardHill team will continue to assist you post closing. We are here to answer any post closing questions you may have as well as assist you should you have a dispute with the mortgage lender. Cutting through the "red tape" that many lenders wrap themselves in is one of the many services that GuardHill and its professionals excel in.
