Shopping for Your Loan Part Two

Part Two of our Series - Shopping for Your Loan

Breaking things down step by step will help make the mortgage process less overwhelming.  Knowing what is expected of you, as the buyer, and what you should expect from others involved in the process will go a long way  toward making buying a home an easier and more enjoyable process.

What responsibilities do you have?

You want to make sure to the follow the federal lending laws.  If you don’t, you could become a victim of loan fraud.  Be sure to follow the steps outlined here as you apply for your loan. Read and understand everything before you sign.  It’s going to seem tedious, but even read the fine print.  Do not sign any blank documents - EVER.  Do not buy property for someone else.  State your income, employment, assets and debts honestly and accurately.  We wrote about this in the first part of the series.  Don’t change your income tax returns.  Tell the truth about any gifts or help you receive to help you buy your home.  Don’t list fake co-applicants on your applications.  Be truthful about any credit issues in your past or present.  Be honest about whether or not you plan to live in the home you are buying and provide truthful and accurate documents.

What are your lender's responsibilities?

Even though these are things your lender is responsible, it’s important that you be aware of them.  Their responsibility is to assist you throughout the enter loan process.  They will collect all of the information necessary for you to apply for your loan.  They will take a look at your eligibility for a variety of loans.  They should help you find the one that meets your needs the best.  They will provide you your GFE (Good Faith Estimate – refer to Part One if you need a refresher).  They will help you complete all the steps necessary to finalize and close your loan to buy your home.  Remember, they must follow all local, state and federal laws that are in place to govern their industry.  There is certain information that the Real Estate Settlement Procedures Act (RESPA) requires lenders to disclose information to potential customers throughout the mortgage process. The information protects buyers from any potential abuse by a lender.  This Act requires that lenders will fully inform you, as the buyer, about any and all closing costs, lender servicing and escrow account practices, as well as business relationships between closing service providers and other parties involved in your transaction. Lenders are not allowed to discriminate in any way against potential borrowers. If you believe a lender is refusing to provide his or her service to you on the basis of race, color, nationality, religion, sex, familial status, or disability, contact HUD’s Office of Fair Housing at 1-800-669-9777.

We've mentioned loan fraud. What is it?

Purposefully giving incorrect or inaccurate information during the loan process is loan fraud. Doing so can result in either civil or criminal penalties.  If at any time, you suspect that you might be the victim of any type of loan fraud or even predatory lending, there are resources available to you.  You can contact a HUD-approved housing counseling agency to find out how to report it.

What is a HUD-1 settlement statement?

This form lists all charges and credits to both the buyer and seller in a real estate transaction.   The RESPA gives you the right to inspect the HUD-1 Settlement Statement before the settlement or closing of your transaction.  When you receive this statement, make sure you compare it to your GFE.  If you have any questions, ask your lender. There are permissible differences between the costs listed on your GFE and your HUD-1 Settlement Statement.  If you have questions or concerns talk to your lender.  If the difference between the fees is higher than the permissible limits, your lender much reimburse you the difference at settlement or within 30 days of your closing.