Buying a house (especially your FIRST house) is a fun, exciting and stressful time. My job and your lender’s job is to help guide you through the process and make the buying process less stressful. Learn about the DOs and DON’Ts during the loan process…

What to DO During the Loan Process

• DO pay your bills on time. Credit scores are very important when purchasing a home. You do not want anything to negatively effect your credit score.
• DO continue to pay your rent payments if you are renting. Your rent payments will need to be verified.
• DO stay in touch with your lender and your real estate agent. During the loan process, timing is critical. Answer all questions from your lender and your agent as soon as you can. Also, if you will be unavailable for some time during the loan process, let your lender and real estate agent know.
• DO be aware of re-verifications. Right at closing (and sometimes the day of closing), your credit score and employment will be re-verified by your lender. If you have a no inquiry on your credit, and explanation and verification will need to be documented.
• DO provide all documents to your lender ASAP. It is best to supply these documents within a day or two of your offer being accepted. Financial statements also have a shelf life. Do not be surprised if your lender requires you to send an updated paystub or bank statements as you go through the loan process. The following documents will be needed (and other documents may be required as you go through the loan process)…
  • Paystubs – Provide 30 days of paystubs for all jobs.
  • W2s – Provide W2s for the last two years for all borrowers.
  • Federal Tax Returns – Provide all pages and all schedules for all borrowers for the past two years.
  • Bank Statements – Provide all pages (even the ones left intentionally blank) of bank statements for all accounts for all borrowers. You cannot provide a screenshot of the statement. The bank statements must include your name, address and account number.
  • Child or Spousal Support – Provide the ratified agreements showing any child or spousal support if this is applicable.
  • Mortgage Statements – Provide mortgage statements for all properties owned, if applicable.

What to NOT DO During the Loan Process

• DON’T apply for new credit. Most home buyers apply for store credit cards to buy furniture or appliances for the new house. The additional debt could change your credit score and your debt-to-income ratios. You may not be able to qualify for your loan anymore.
• DON’T co-sign on a loan for anyone. Co-signing can decrease your credit score and you may not be able to qualify for your loan.
• DON’T change jobs. If you change jobs, you will have to wait until you have 30 days of paystubs before you will be able to close on your loan.
• DON’T be surprised if your lender asked for updated documents or additional documents. Bank statements and paystubs may need to be updated. Also, it may seem like your lender is asking for the same information you already provided. Because mortgage fraud is increasing these days, the lending industry is heavily regulated and some of those new regulations seem excessive.
• DON’T make any large deposits to your checking account. All large deposits (other than your regular pay) must be verified and have a paper trail. Never deposit cash without talking to your lender first. (For example, if you grandmother gave you $200 for your birthday, do not deposit the check or cash into your account.)
• DON’T change bank accounts. All money transfers have to be documented.
• DON’T deposit any gift funds into your account without first talking to your lender. Gift funds have a strict protocol that has to be followed.

Following the “DOs and DON’Ts” during the loan process will help make your loan and closing process go much smoother! If you have any questions about the loan process or the home buying process, feel free to give me a call at 843-267-2710.

“Helping You Find the Sandcastle of Your Dreams!”

 

New Loan Estimate and Closing Documents Changes

I wanted to share with you some changes coming down the road that will effect your closings. Starting with any loan applications taken August 1, 2015 or after, the documents you receive from your lender and at closing will be different than the documents you have previously seen. After the financial and mortgage meltdown on 2008, Congress established the Consumer Financial Protection Bureau, and the changes in these forms are part of this legislation.

 

Loan Estimate

Within 3 days of applying for a loan, you will receive a Loan Estimate. This document will replace the Good Faith Estimate and the first part of the Truth in Lending statement. It will disclosure much of the same information, but some information will be formatted a different way. One of the biggest changes you will see is at the bottom of the first page. You will now know the estimated dollar amount of your closing costs and the estimated dollar amount you will need for closing (including your down payment).

 

Closing Documents

The Closing Document is now the combination of the HUD-1 (settlement statement) and final Truth in Lending statement. The first page of the Closing Document will be largely the same as the first page of the Loan Estimate. Instead of items being given a line number, the form is divided into sections. On the last page of the Closing Document, you will also see the contact information for your Lender, Mortgage Broker (if applicable), both Real Estate Agents involved in the transaction and the Settlement Agent (in South Carolina, this will be the Buyer’s Attorney). This information will be helpful if you have any questions after closing. You will receive the Closing Document 3-6 business days prior to your closing. In some circumstances, any changes to the Closing Document will result in another 3-day review and a delay in closing.

 

Sample of the Loan Estimate and Closing Document: http://vid.us/n7sd3k

 

How do these changes most effect you as either a buyer or seller?

• Closings will take longer. The transaction that previously could be closed in 30 days will now take closer to 45 days, and 45 day closings will now be closer to 60 day closings. Plan ahead!!! If you can apply for a loan prior to August 1, 2015, you will save some time. Also, if you have a deadline where you have to move (lease, relocation, etc), start planning about a month sooner than you previously would have.
• The law states that you have to receive the Closing Documents 3 days prior to closing so you have time to review. Even if you completely understand the Closing Document and have no questions, you cannot close for 3 days.
• Walk-throughs on home purchases may happen sooner than the day or two before closing. Sellers can give you a credit because of a walk-through without prompting another 3-day review period.
• Items that would trigger another 3-day review period include items on the lender side (change in interest rate or APR, adding a pre-payment penalty, etc.)
• You will know what amount to bring to closing much sooner than in the past.
• Closing Documents cannot be changed at the closing table like may have happened in the past.
• As a seller, you need to be aware that closings could take longer. Do not be discouraged if closing is delayed by a few days.
• Back-to-back closings are a thing of the past. There are likely too many variables now and back-to-back closings will be very limited.
• A best practice is that all contingencies to the contract will be removed or fulfilled 7 days prior to closing.
• The first 60-90 days of this transition will be the hardest. Lenders, attorneys and real estate agents will be dealing with two sets of rules and regulations.

 

To help you prepare for the changes, please take a look at a sample Loan Estimate and sample Closing Document along with some of my notes from yesterday’s class. I will be happy to answer any questions about these new documents and the closing process.

To keep you updated on the current interest rate conditions, here is a copy of this week’s rates. You can visit my website, www.MyrtleBeachRealEstatePropertySearch.com, to search for any properties for sale. If you would like to see a list of properties put on the market in the last 48 hours, visit https://myrtlebeachrealestatepropertysearch.com/new-listings-48-hours-old/​.