Shopping for Your Loan Part Three
Greg Anderson
Greg has served the real estate needs of individual home buyers and sellers as well as large corporate clients for thirty years...
Greg has served the real estate needs of individual home buyers and sellers as well as large corporate clients for thirty years...
Shopping for Your Loan
What is an escrow account?
An escrow account is an account that your lender will deposit the money you pay each month in addition to principal and interest to cover real estate taxes and insurance premiums. An escrow account is usually required by a lender to make sure that money will be available to make these payments. The taxes and insurance premiums you owe will be paid from this escrow account. The lender is legally required to make these payments from your escrow account on time, but you will want to make sure that you’re payments are being processed in a timely manner.
What gives you the right to possess or sell your property or home?
It’s the to your home that allows you to do this. A title is the legal record that documents the ownership of the property. Your lender will require certain title services. These services will guarantee that there are no other liens or claims against the home you’re buying. These services should include the title search, examination of the title, preparation of a commitment to insure, conducting the settlement and all administration and processing services that are also involved. Your lender may have a title insurance policy. Their policy will protect them against losses resulting from claims by others against your new home. Their policy does not protect you. If a title claim occurs, it can be very expensive to you, if you are not insured. If you want to protect yourself from claims by others against your home, you will need to obtain an owner’s policy. If you want to save money on your title insurance, contact several title insurance companies and do a rate comparison. If you are building a home, make sure that the title insurance policy covers claims by contracts. Depending on where you live, title insurance rates are filed with the state and may be fixed. Ask your title insurance again about any discounts.
You've submitted your loan application. Now what?
With most lenders, it can take anywhere from one to four weeks to complete the underwriting of your home loan. Once you’ve let them know that you want to proceed with the loan described in you GFE (Good Faith Estimate), they may ask for more information. The sooner you respond to any requests from your lender, the quicker your underwriting will be completed. They will verify any information you give them and will let you know the results of the underwriting process. If your loan is approved, a closing date will be set and your lender will review everything with you. Once your settlement or closing is completed, you will be able to move into your new home.
How do you choose the best loan for your situation?
This is primarily determined by your personal situation. You can help with your loan search by asking yourself some questions among the options available. Here are just a few questions:
Do you expect your finances to change over the new few years?
Are you planning to live in your home for a long period of time
Are you comfortable with a mortgage payment amount that may change?
Do you want to be free of mortgage debt as your children approach college-age?
Do you want to be mortgage free as you get close to and prepare for retirement?
Discussing your answers to these questions with your lender will help you decide which loan will best meet your needs.