Purchase Loans

Purchase Loans

Purchase Loans Using This Process...

Pre-Qualification
Lenders are encouraging buyers to get pre-qualified in order to get purchase loans to enable the buyer to get a mortgage even before they begin looking for a house. This way, buyers know ahead of time how much house they can afford.
Loan Search
Although buyers often use a lender recommended by their Real Estate agent, some prefer to do their own comparisons. Borrowers may choose to contact a mortgage broker who has access to a wide variety of loans.
The Hunt
At this point, the buyer begins shopping for a house. When the right one is found, the terms of the sale are negotiated, including the sale price and the type and conditions of the loan being sought.
Loan Application
It’s crucial to supply the lender with as much information as possible, as accurately as possible. All outstanding debts as well as assets and income should be included.
Documentation
Paperwork supporting the application must also be submitted. Typical documentation includes pay stubs, tax returns, and account statements verifying the source of the down payment, funds to close, and reserves.
Appraisal
Lenders require an appraisal on all home sales. This step could jeopardize a deal if a big discrepancy were to exist between the home’s sale price and appraised value.
Title Search
A title search determines if there are any liens against the property. All liens must be cleared before a sale can be completed.
Termite Inspection
Most purchase loans require an inspection for termite and water damage. Some problems may need to be repaired before finalizing the sale.
Processors Review
The lender’s loan processor packages all pertinent information to be sent to the lending underwriter, including any explanations that may be needed, such as reasons for derogatory credit.
Underwriters Review
Based on the information put together by both the loan executive and processor, the underwriter makes the final decision on whether a loan is approved.
Mortgage Insurance
Many lenders require payment default insurance when borrowers put down less than 20 percent on a loan. The mortgage insurance company must also approve the loan.
Approval, denial or counter offer
In order to approve a loan, the lender may ask the borrowers to put more money down to lower the risk to the lender.
Insurance
Lenders require fire and hazard insurance on the replacement value of the structure. Flood insurance will also be required if the property is located in a flood zone.
Signing
Final loan and escrow documents are signed.
Funding
The lender sends a wire or check for the amount of the loan to the title company.
Close of Escrow
Documents transferring title are recorded with the County Recorder.
Confirmation of Recording
The title company then authorizes the escrow company to draft a check to the seller.
Buyer Begins Making Mortgage Payments

Numbered list above discussed the steps needed for Purchase Loans.

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