You’ve applied for a mortgage. Time to move in! Just kidding. There is still much more work that you need to accomplish before you can sleep in your new home. But don’t fret. We are going to go over all of the helpers you will meet along the way and what you need to do leading up to the closing to make sure you step into your new dream house on time.
Guiding You Through Your Home Closing
Once you have applied for a mortgage loan make sure to know who you will be working with and what their function is during the process Since you will be dealing with multiple people and a lot of paperwork, you’ll want to keep contact information like phone numbers and email addresses in an easily accessible place to avoid confusion. Keep multiple copies of EVERYTHING that you provide. Multiple parties may need copies of the same documentation. Let’s take a quick run through of the key players you will be dealing with.
Mortgage Loan Originator – One of the first contacts in regards to applying for a mortgage loan at the credit union will be a Mortgage Loan Originator (MLO). They are the person that walks you through the application process, guides you to the best product that will fit your needs, and handles any front-end questions. All MLOs have to be registered with the Nationwide Mortgage Licensing System and Registry (NMLS). They will have a unique identifier that you can look up in the nationwide registry. If they do not have this then it is not advised to work with them or that institution.
Mortgage Processor – Once your application has been submitted you now need to provide documentation for review. A mortgage processor collects all of these stipulations. They are responsible for making sure everything is organized and complete before sending to a loan underwriter. The mortgage processor will be your main contact during this period for any questions regarding the documentation needed. It is important to stay in touch and meet the deadlines they lay out for you in order to close in an appropriate time frame.
Loan Underwriter – Once all of your documentation has been collected the processor will send it for review by the loan underwriter. Their job is to review the application with corresponding documentation to assess if the risk to lend you the money is acceptable. They will evaluate your credit, assets, the property and its value, the amount of the sale, etc. It is important that all documentation is available to them and clear. If something doesn’t add up the entire process is halted. Surprises at this point could cause major delays so be completely upfront with your mortgage originator from the start. Any credit concerns, possible issues with the property, etc. will be found out at some point by the underwriter, so it’s best to be clear and transparent during all appointments and communications prior to this step.
Leading Up to Your Closing
You’ve been pre-approved for a mortgage and your offer has been accepted. What now? This is exciting news! Take two minutes to celebrate. OK, snap out of it. Back to reality. There is still work to be done.
Here are a few of the most common contingencies — things that buyers must complete — before the purchase can happen.
- Home inspection. Buyers have the right to have the home professionally inspected. At this time you may request anything that is broken to be fixed or you can back out of the sale.
- Appraisal. Your mortgage lender will hire a third party appraisal to be done. If the value is less than the sale price you are able to back out of the sale without forfeiting any monetary deposit.
- Financing. If for some reason you are unable to obtain a mortgage loan for the sale then you are able to back out of the deal.
- Home sale. You may have to sell your current home to be able to purchase the new one. This prevents you from paying on two mortgages at the same time. This can be tricky because you have to sell your home in a certain time frame or else the deal may fall through.
Home Owners Insurance
Proof of home owners insurance will need to be presented before the closing. Contact your insurance provider up to two weeks prior and have it dated effective for the date of the closing.
As we noted earlier, this is your chance to have a professional inspect your potential new home. We are sometimes blinded with excitement and don’t catch everything when we tour the home we want to purchase. The inspector will get down to the nitty-gritty for you and let you know of any concerning issues that may need to be fixed or replaced before you can move in. It’s also nice to find out if the property is actually inhabitable. During your home inspection:
- Take as many photos as you would like.
- Measure windows, rooms, appliances etc.
- Ask the inspector questions about the condition of the home and construction.
The closing attorney takes care of all the arrangements necessary for the closing. Their primary function is to examine the titles to make sure it is clear of any liens, review all documentation to make sure the transaction is legally sound and to answer any questions pertaining to the documentation. Most importantly they are there to distribute all of the monies to the appropriate parties such as the seller(s) and the title company. Before the closing make sure to:
- Verify location of the closing with the closing attorney.
- Review the HUD 1 settlement agreement. This document outlines the exact mortgage details like monthly payments, the loan term, interest rate and any additional fees (AKA closing costs).
Most purchase agreements allow a final walk-through of the home 24 hours before closing. Take a look around. Make sure everything is where it is supposed to be and check for things that aren’t supposed to be there. This is your last chance to make sure that the home is in the agreed upon condition. This will be easier since the home should be vacated by this time unless otherwise agreed upon. Double check everything if your inspection revealed any problems that the seller agreed to fix.
Day of closing
The day has finally come for you to close on your mortgage loan. Each closing will be unique to every deal. Here are a few essentials that you will need at most mortgage closings:
- Photo ID. Government-issued photo ID for all parties that will be signing the loan agreement. An unexpired driver’s license works best.
- Payment. Bring a cashier’s check for the closing costs. Make sure to bring your checkbook in case there are any last minute adjustments you will need to cover.
- Insurance. It’s possible you will have already provided proof of homeowner’s insurance but it doesn’t hurt to bring a copy.
- Docs and Reports. Make sure to verify if there is any additional documentation or reports that you need to bring to the closing. Make a list and check it twice.
Now you are ready for your mortgage closing. We have gone over all of the major players involved and what you need to bring to the closing and what to expect. Remember, each closing will be unique to that particular transaction so be ready for anything. And most of all, stretch your signing hand because there is going to be a lot of paperwork. Good luck!