The Mortgage Process

When it comes to purchasing a home, the majority of us will be doing so using a loan of some sort.  In fact, according to the Lynchburg Association of Realtors, over the past 2 years, 80% of buyers have received financing in order to close on their homes.  Which means, you have to select a lender you trust and work well with in order to get you the best loan possible!  The information below will detail what you should expect during the loan process.

  1. Get Pre-qualified/Pre-approved for a loan.  This will give you an idea of what price range you can receive a loan for and more importantly, what price range you feel most comfortable in.Doc4
  2. Find the perfect home for you. I will show you any homes you want to see that you think will be what you are interested in.  Once you have decided on the perfect home, I will negotiate your deal to ensure you receive a fair price and are completely taken care of and contractually safe!
  3. Once the contract is ratified, contact the same 3 mortgage companies to receive Loan Estimates to compare. They CANNOT ask you for a post-dated check or credit card information to keep on file for later charges; however, they CAN charge a reasonable fee for a credit check, so the number of lenders you contact is up to you. You will have 10 DAYS to decide which company you wish to proceed with.
  4. Once you have chosen your mortgage company, you MUST inform them of your intent to proceed with the loan before the 10 days expire. NOW you can be charged fees. Some companies may require you to pay for an appraisal, application, or other loan processing fee immediately after or as a part of confirming the intent to proceed with the application- this will vary with different companies, but they should inform you of when you are expected to pay these.
  5. Some information your lender will need is as follows:
    1. Property Taxes
    2. Homeowner’s/Condo association fees (where applicable)
    3. Estimated cost for homeowner’s insurance
    4. Contact information for Closing Disclosure
    5. Current Pay Stubs. Your last two pay stubs will suffice. Make copies and don’t hand out your originals.
    6. This is your wage and tax statement, issued by your employer for a calendar year. It is what you attach to your tax returns. Lenders generally want the last two years of W2s from anyone on the loan.
    7. Federal Tax Returns. If you haven’t yet filed your tax return for last year, then find the two previous years of tax returns. Make copies. Include all schedules. Tip: Make sure the tax returns are signed by you.
    8. Bank Statements. Some lenders want two months, while others will demand the last three months of bank statements. Make a copy from each lending institution. Include every page of each bank statement.
    9. Asset Statements. If you own stocks, bonds, mutual funds or retirement accounts, make a copy of each statement. Lenders prefer hard copies over those printed online but will accept online statements if that’s how you receive your statements. Make copies.
    10. Copy of Current Driver’s License. If you are meeting with the lender in person, you can bring your driver’s license with you for identification and reproduction. Otherwise, copy your license on a scanner or copy machine and include it. Your license should have a photograph of you. 
  6. You will be given a closing date and all appropriate inspections will take place, where applicable.
    1. Doc3Appraisal- lender will schedule
    2. Home Inspection. If we find anything on the home inspection that needs to be fixed, I will draft a repair addendum for you so you are happy with your new home. – I will schedule once you have selected who you are going with
    3. Well flow Test (if applicable) – I will schedule once you have selected who you’re going with
    4. Radon Test (if applicable)- I will schedule once you have selected who you’re going with
    5. Termite Inspection- Seller’s responsibility
    6. Well/ Septic Inspection- Seller’s responsibility.
  7. Three days before closing, you will receive your Closing Disclosure.  Compare this to your Loan Estimate you received at the beginning of the process to make sure the charges are similar to what was estimated for you.  If ANY changes need to be made, we need to know immediately!Not all changes require the lender to issue a revised Loan Estimate. Minor changes, for example when the seller agrees to pay for a specific cost not included in the original agreement, do not require the lender to issue a revised Loan Estimate. Significant changes most likely do.
    1. Common reasons why a Loan Estimate may be revised include:
      1. You decided to change loan programs or the amount of the down payment.
      2. The appraisal on the home came in higher or lower than expected.
      3. Your credit status changed, perhaps owing to a new loan or a missed payment.
      4. The lender could not document overtime, bonus, or other income provided on your client’s application.

Why get pre-qualified?

I recommend my buyers get pre-qualified before beginning their home search because knowing exactly how much you can comfortably spend on a home reduces the potential frustration of looking at homes beyond your means.

You will also need at least a pre-qual letter to go with your offer and earnest money deposit in order to make the sellers aware that you are serious, ready and able to purchase their home.