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The Loan Process
Part 4 – Approved! OK - You've been approved for your loan request. Your approval is contingent to only three items. 1. A "ratified" purchase contract (this means an offer accepted by the sellers with signatures of all parties) and all addendums 2. A satisfactory appraisal 3. A clear preliminary title report Two months have now passed; you've made offers, and have finally been successful in getting a seller's acceptance of your offer! If you fall into the "norm",
your Realtor would have written in the contract that the settlement of the
transaction would be approximately thirty days from the date of acceptance. The race is on! Your first step will be to notify your
loan agent that you now have item number one of the conditional approval. This item can be faxed to the loan
officer by you, or your Realtor, but all pages must be legible. Your loan agent will contact a licensed
appraiser that is familiar with the neighborhood of the property you are buying.
Voila, item number two is now in process.
Some appraisers accept payment for their
services at the close of escrow through the Title Company. Others request for
payment in advance or at the time of inspection. In today’s market, the appraisal is
very important. Many homes are selling above the asking price and above the most
recent comparable sales in the subject area. The appraiser provides a grid sheet of
your future home next to the comparable homes located in the same vicinity as
yours. Adjustments will be made from the sales
price of the comparable sales for various items such as square footage, age,
condition, view, etc. This will give the appraiser an adjusted sales price to
base the estimated fair market value of your soon to be home.
Your Realtor will order the reports you
have requested per the purchase contract. These items may include a structural
pest control report, property inspection, sewer/septic/well, geological report,
roof inspection and any other reports deemed necessary for your new home. The Realtor will also deliver your
initial deposit check (earnest money) to the Title Company (also known as the
escrow holder) within three business days. The escrow holder will provide a deposit
receipt, and item number three of your conditional approval, the preliminary
title report. A copy of the preliminary title report will be given to your Realtor, the seller’s Realtor, and your loan agent. The Title Company operates as an independent third
party, and is responsible to provide you not only with proof of clear title, but
also title insurance and an accurate accounting of all monies exchanged with all
parties. The Title Company is also where you will go when it
is time to sign the loan documents, and it is also at this time that the Title
Company will provide a reconciliation statement of all funds. This document is known as the HUD-1, or the
Settlement Statement. Now, remember back when you got your loan approval a
couple of months ago. Remember how good it felt? Well, it must feel better now because you now have a ratified contract, and have satisfied all your conditions to purchasing your new dream home.
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