While obtaining a loan is scary for many first time buyers, here's another area where a good real estate agent can make all the difference in the world. Clearly, you are free to work with any lender you wish. However, agents usually have contacts in the mortgage industry, and it can be advantageous to work with one of their associates. The loan application process is complicated, and there are a lot of things that need to be set up properly. Your agents' relationship with their lender will help you get all of the information you need in a timely fashion.

Preparing your loan application can be almost as tedious as preparing your initial offer. Fortunately, your potential lender will give you a checklist of what they need to process your loan. See our sample mortgage loan application checklist for details. Make photocopies of every document you submit, and keep them in a safe place. Once you've submitted the application, the lender will verify everything in your application -- from your employment to your credit history and financial status. Be as honest and accurate as you can when completing your application, because errors will only slow the process down. The verification process may take as long as a month to complete -- and you don't want to drag it out further because of mistakes that need to be cleared up.

Your lender will send your employer a Verification of Employment to complete and send back to verify that your reported income is accurate, and that you have held the jobs you say you have. A Verification of Deposit will also be performed to confirm that you have enough money in your accounts to cover your down payment and closing costs. For certain loan programs, especially those with low-money-down, you may also have to provide proof that you have one or two months of mortgage payments in savings as well. Performing these checks on your own, beforehand, through your savings institution can help avoid any surprises. Similarly, obtain a copy of your credit report so that you can make sure that there are no errors -- it can take a lot of time and energy to make corrections, but can save a lot of time in the loan verification process. While in an ideal world, your credit report would represent reality, credit reporting is an imperfect process, and errors in the credit bureau files can make the verification process more difficult. If, through some mistake, your credit report has an extra zero on a student loan or auto loan amount, it's going to cause a problem for your lender when they calculate your ability to make your house payment. Taking care of any mistakes before the application process will help ensure approval.

The lender will order an appraisal of the property to estimate the property's market value. The maximum loan that the lender will provide will be based upon the lower of the sales price or appraised value.

The good news about the loan application process is that within three days of applying for your loan, your lender will give you a document called a "Good Faith" estimate that is the lender's best estimate of your closing costs. Now, the guessing is over -- you finally have a solid estimate of what you're looking at in a house payment. This document shows an estimate of the amount you'll pay for "points" on your loan, as well as other loan fees that may be charged to process or close your loan. Other estimated charges include mortgage insurance, title insurance and recording fees.

If all goes well, within about a month, you'll have loan approval. Now, you can finally relax -- you're almost finished. Closing is the final step in the home-buying process. At the closing, you will settle all of the financial details associated with the purchase -- but that's no problem, because you've already got your loan approval and have already planned to make your down payment and closing costs. You'll also receive title to your new home. Most closings are conducted by a representative of the buyer's lender, an attorney, or an employee of the title insurance company. The closing officer ensures that all necessary documents are signed and verified, and that the money from the sale is properly distributed. You will need to bring with you a certified or cashier's check for your down payment and closing costs, less your earnest money. A day or two prior to your closing date, the closing officer will let you know exactly what dollar value you need. Then, it's just a matter of signing papers. Typically, the closing officer will begin by reviewing the mortgage note and the mortgage document and ask you to sign them. Then, he or she will move on to the Settlement Statement, where each of the costs being paid by the sellers and the buyers is itemized. After the officer has covered the settlement statement, he or she will ask for your cashier's check. You will be given a copy of the deed, the legal document that transfers ownership of the property from the seller to the buyer. You will provide proof of your title insurance, which protects your legal ownership of the property you're buying, and then the officer distributes the money generated by the sale. It is the reponsibility of the closing agent to present checks to the sellers, the seller's lender (if there is an existing mortgage on the property), the real estate agents involved in the sale, and any other parties indicated on the settlement statement.

If you will be taking immediate occupancy of the property, you will receive the keys to your new home before you leave the closing. Congratulations, and welcome to the world of home ownership! Now all you've got to do is plan your housewarming party.

The following section talks a little bit about my approach to real estate. I hope that when the time comes for you to find an agent to work with, you will consider me and my team.

Back to Top