Determining Closing Costs and Out of Pocket Expenses
Ok you negotiated the perfect buy, and now its time to move on to the financing aspect of things. Once your Realtor has an accepted purchase agreement he or she will forward a copy to myself. I will then order your title and prepare your formal loan application. I will prepare for you, your full loan application and send it to you with all the state specific disclosures. It's important to note that at this point these are merely estimates and not final numbers, nor are they a commitment to lend or an acceptance of the loan on your part. It is merely an application with estimates of numbers to get the process started. I will send all the paperwork to you for your signatures to get the process going. Another big advantage you will have with me is my understanding of how underwriting of the loan process it handeled. Anyone else that would have dealt with a broker or retail banker has no idea how this works. They have multiple departments to send you application to that will inform them of what to do next and if they are any problems. They may understand how the loan program guidelines work, but they have no clue how they are underwritten and approved. I basically pre-underwrite every loan application when it goes out. What does this mean to you? It means no crazy surprises or the repeated asking of documentation over and over again. Remember when you go into contract with your home it is time sensitive. Most of the time 30 to 45 days is what is given to you to secure financing. Most retail banks run 45 - 90 days turn times on loans these days. A mortgage broker could be even worse as they have no idea how the underwriting and approval process will work as they are merely finding a bank for your loan, dropping it off and collecting a check.
Why are turn times so important? It affects EVERYTHING! One thing you don't want, is to have to ask your Realtor for a contract extension. There is no guarantee the seller will accept it and you could loose the home! There is also a little know fact that both first time home buyers and very experience home buyers are not aware of. When you lock an interest rate, the longer you have to lock it for, the worse it is! That's right if you lock a rate for 30 or 45 days the rate is not as low as say a 10 or 15 day lock. The faster your lender can process and close the loan the better the interest rate you will get! Now that is something NO retail bank or broker will tell you! As a matter of fact, to make it even worse, if a bank or broker locks your rate for 30 or 45 or even 60 days and the loan is still not ready to close and they have to extend the rate, they will pass on the cost of the extension to you on your final HUD closing and settlement statement! That's right, it will be a percentage of the loan amount for the extension. Maybe .125 0r .250 percent for an extra 10 to 20 days passed right along to you! You need a lender that is knowledgeable enough to make sure everything is in order from the start of the application to prevent any and all delays. You also want a lender that is very fast both with their turn times for the approval and for their turn times for their conditions after the approval.
I commit and guarantee no more than a 30 day closing or I will pay for your appraisal! This moves us along to the next page. OUT OF POCKET EXPENSES