Talk the Talk – Know the Mortgage Lingo at Closing

Know the Mortgage Lingo at Closing

Most borrowers are completely at bay about the closing process- Sure they sign all the documents but when it comes to understanding what stage the process is in, they simply nod and smile through it all. You trust your real estate & mortgage team to do everything right, but its also important to understand the terminology that is being used. Here is some of the common lingo that is used at closing.

  • Docs Sent- Buyers are always very stressed out during the approval process and are eager to know whether they meet all the qualification requirements that have been laid-out by the lender. If you hear the term docs sent- it means you have made it and that the closing department has sent all the approved paperwork on to the closing agent- the title company or an attorney.

  • Docs Signed- This means the documents have been signed. This includes all the paperwork between the lender and borrower and will have details like the contracts and terms of the loan

  • Funded – It means that the funds have now been transferred from the lender to the concerned lending agent (with all the disclosures that are required). In the case of a home purchase, if the closing has taken place in the morning, the funds will be sent that same day. If the closing takes place in the afternoon, the fund transfer will take place the following day.

  • Recorded – This is related to the recording the deed transfers title or the legal ownership of that property to the buyer. The transaction will be recorded by the attorney or the title company, in the county register of the area where the property is located. This generally takes place soon after closing.

Gaining Clarity

It helps to understand the closing lingo as it gives you more clarity about what exactly is taking place and you will be feel a little less lost with the entire closing process. The more clarity you have, the more confident you will be while speaking with the different parties involved in the process. You can also contact ResMac Home Loans for more information about application approval and to understand what the modalities are.

 

Important Factors To Consider When Getting Financing On A Foreclosure, Short Sale or New Construction

There are a number of foreclosures and short sales in the market and when you are planning on buying a home, they may present a lot of value. But there are certain problems associated with them that homeowners should be aware of before applying for foreclosure sale financing:

  • Property Condition- Homeowners who are facing a foreclosure or want to short sell their house generally do not have the money to maintain the property well or pay for the mortgage. This can cause problems for you, if you are planning on getting an FHA loan. These require that the property should be ready to move into

  • Timing Challenges- Typically, a short sale process has very awkward timeframes for approval of the purchase contract and loan closing. Every bank has different rules; however the approval can take 7-120 days. Since there is no fixed timeframe for approval of a short sale, timing of the loan submission, rate locks & the closing can become very challenging. When you are buying a short-sale property, you should be prepared for loads of paperwork

  • New Construction- If you want to make use of FHA financing to buy new construction – there are a number of different issues that might crop up. You must have a CO- Certificate of Occupancy and if this is not available, you will not be able to go to the FHA and may have to opt for a renovation loan

  • Builder’s Certification- You might need a 10-year warranty, termite inspection, well test and septic inspection, when applicable while buying a home

  • Construction Permits- You will require specific documentation (in a certain combination), to satisfy the lender and the FHA. It is important that you work with a knowledgeable loan officer while buying any new construction with financing from the FHA

The Right Support

If you decide to use conventional Freddie Mac/ Fannie Mae financing you will still have some hurdles to navigate, but they will be a little less than the ones you encounter with the FHA. But the down payment will be higher and there are more stringent credit qualification guidelines.

Regardless of whether you plan on a FHA loan, renovation financing or conventional financing, it is crucial that you have a strong home-buying team who can help and support you through the negotiations and tons of paperwork. For more information on financing for foreclosures, contact ResMac Home Loans.

 

Top Mortgage Terms To Know

If you scan any mortgage website, you will find a detailed glossary that contains literally hundreds of lending and real estate-related terms. These are a few of the top terms that you will hear a number of times right through the approval & home buying process. Once you understand all the industry jargon that professionals in the field use and you have a good home buying team, you will be a little more confident while discussing various topics and that are crucial to your transaction.

Mortgage-Related Terms

  • Amortization Schedule: The payments schedule that show the amount that has been applied to the principal-amount & the interest through the payoff

  • Adjustable Rate Mortgage (ARM): The ARM is related to a certain financial index & might adjust post a fixed period of time

  • Annual Percentage Rate (APR): The rate of interest which is inclusive of loan-related fees. This helps in determining the entire cost of borrowing the loan.

  • Buy-down: The up-front fee that the borrower pays to reduce the mortgage rate & the monthly payment

  • Combined Loan-to-Value (CLTV): All the mortgage obligations on a specific property in comparison to the current fair market value

  • Delinquency: Late payments on the borrower’s monthly liability

  • Disclosure: The documents that the lender, buyer & seller sign during the real estate purchase/ mortgage transaction

  • Discount Point: The amount that is paid to reduce an interest rate

  • Fixed Rate Mortgage: The mortgage in which the interest rate does not change through the term of the note

  • Good Faith Estimate (GFE): The mortgage broker/lender has to provide a GFE to the customer. It is an itemized list of all the costs & fees related to the loan and has to be provided within 3 business days of the loan application date

  • Gross Income: The total taxable-income that is verified by the lender via tax returns & W2’s

  • Home Equity Line of Credit (HELOC): The line of credit that is secured by real estate

  • Joint Liability: When multiple people apply for & secure a mortgage

These are just some of the terms you will come across while your loan is being processed and closed. You will also hear real estate terms like Acceptance, Contingency, Due-Diligence, Deed of Trust, Earnest Money, Escrow, Equity and a lot more. Reading a little about all these terms will help you gain a firmer footing when you are applying for and waiting for your mortgage loan to get approved. For more information, contact ResMac Home Loans today.