Now that you have a contract the first things to address are a home inspection, obtaining homeowner's hazard insurance and securing a loan.
Signature & Stewart Settlements' Guide to Success For Buyers
- Provide all required documentation to your lender immediately.
- Get your hazard insurance policy in place and to your lender or closing will not take place on time.
- Make sure you have arranged for your money to be at Signature & Stewart Settlements by the time of closing. Funds must be in the form of cashier's check, certified funds or wire transfer. If you are wiring start far enough ahead so the funds can be received prior to your actual time of closing. Signature & Stewart Settlements must be able to verify receipt of the wire prior to your closing or settlement will be delayed. If you are getting money out of an investment account you will need to start 7 to 10 days prior to when you'll actually need the money. Be aware that most investment accounts are not able to wire directly to a settlement company, please make your preparations early.
- Come to closing with information from your lender on your loan program so we will be able to make sure your documents are correct.
- Make sure you bring government issued photo identification and any other special documentation your lender has requested.
- Always let your agent, the lender and Signature & Stewart Settlements know if there is any change in your status to attend closing. If you are going to use a power of attorney it must be a Virginia power of attorney and it must be approved by the lender and the settlement company and this must be done ahead of closing.
- Expect closing to take between 1 and 1 1/2 hours depending upon the loan program you have chosen.
Home Inspection
It is a good idea to have the home inspected. A licensed home inspector will determine the condition of the plumbing, heating, cooling and electrical systems as well as examine the structure to assure it is sound and to determine the condition of the roof, siding, windows and doors. Talk to your real estate agent about your home inspection and have them recommend a respected, trustworthy home inspector in your area.
Homeowner's Hazard Insurance
If you obtain a loan it is required that you obtain homeowner's hazard insurance. Insurance companies are plentiful so it is wise to talk to an insurance agent you have used in the past or use the recommendation from your real estate agent. Call about insurance in advance so the policy can be given to your lender several days before closing. If you do not have proof of hazard insurance on the property you are purchasing and you are financing any portion of the sales price settlement will be delayed. Your lender will require the first year's premium to be paid prior to or at closing. Before purchasing a policy contact your lender and make sure that the coverage stated in the hazard policy meets the lenders requirements.
Shopping for a Loan
Your choice of lender and type of loan will influence not only your settlement costs, but also the monthly cost of your mortgage loan. There are many types of lenders and types of loans you can choose. You may be familiar with banks, mortgage companies and credit unions, many of which provide home mortgage loans. Sometimes your real estate agent can help you find a mortgage loan by recommending that you deal with a particular lender. It is a good idea to use a lender that has been recommended to you by your realtor or a lender you have used in the past. By doing this you will save precious time and ensure your closing goes as smoothly as possible. Using a lender your real estate agent recommends is helpful if an issue does arise because they have a strong professional relationship with the shared interest of making you happy.
Mortgage Brokers
Some companies, known as "mortgage brokers" offer to find you a mortgage lender willing to make you a loan. Their job is to collect the initial paperwork, do the shopping for you and find the best loan to fit your needs. For this service the broker will be paid by the lender, the borrower, or both. You may wish to ask about the fees that the mortgage broker will receive for its services and who will be paying them. A mortgage broker may operate as an independent business and may not be operating as your "agent" or representative. The mortgage broker will not be servicing the loan or providing the final loan documents. If you decide to use a mortgage broker please make sure that all documents they have requested are turned in at least 7 to 10 days prior to your scheduled closing. This way the mortgage broker has sufficient time to submit your paperwork to the mortgage lender and the mortgage lender has the appropriate time to do the final processing in order to deliver the loan package to Signature & Stewart Settlements.
Government Programs
You may be eligible for a loan insured through the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs or similar programs operated by cities or states. These programs usually require a smaller down payment. Ask lenders about these programs. You can get more information about these programs from the agencies that run them.
Interest Rate, "Points" & Other Fees
Often the price of a home mortgage loan is stated in terms of interest rate, points and other fees. A "point" is a fee that equals 1 percent of the loan amount and called either an origination point or a discount point. Points are usually paid to the lender, mortgage broker, or both at settlement on the HUD-1. Often, you can pay fewer points in exchange for a higher interest rate or more points for a lower rate. Ask your lender or mortgage broker about points and other fees.
A document called the Truth in Lending Disclosure Statement will show you the "Annual Percentage Rate" (APR) and other payment information for the loan. The APR takes into account not only the interest rate, but also the points, mortgage broker fees and certain other fees that you have to pay. Ask for the APR before you apply to help you shop for the loan that is best for you. Also ask if your loan will have a charge or a fee for paying all or part of the loan before payment is due (prepayment penalty). You may be able to negotiate the terms of the prepayment penalty.
Lender-Required Settlement Costs
Your lender may require you to obtain certain settlement services, such as a new survey, mortgage insurance or title insurance. It may also order and charge you for other settlement related services such as fees for loan processing, document preparation, underwriting, flood certification or an application fee. You may wish to ask for an estimate of fees and settlement costs before choosing a lender. Some lenders offer "no cost" or "no point" loans but these loans may have a higher interest rate.
RESPA Disclosures
RESPA requires that, when you apply for a loan, the lender or mortgage broker give you a Good Faith Estimate of settlement charges you will likely have to pay. If you do not get this Good Faith Estimate when you apply, the lender or mortgage broker must mail it to you within the next three business days.
Be aware that the amounts listed on the Good Faith Estimate are only estimates. Actual costs may vary. Changing market conditions, can affect prices; keep your Good Faith Estimate so you can compare it with the final settlement costs.
Title Services
"Title" refers to the legal ownership of you new home. If you have questions about the manner in which you will be holding title for your new home please contact our office to be referred to an attorney who can give you that advice.
We will order a title search on the property, review and examine the findings and issue our title commitment that will include requirements to close the loan and insure you and your lender in accordance with the policy. You can arrange to have a copy sent to you or your attorney so that you can review any matters affecting the title. Lender's title insurance is required by the lender to insure the validity of their lien against the property. A lender's title insurance policy does not protect you. Similarly, the prior owner's policy does not protect you. If you want to protect yourself from claims by others against your new home, you will need an owner's policy. If a claim does occur, it can be financially devastating to an owner who is uninsured.
Survey
Lenders or title insurance companies often require a survey to show the location of the improvements on the property. If you want a boundary survey, marking the corners of the property you need to let Signature & Stewart Settlements know in advance so that the correct type of survey is ordered. A boundary line survey will incur additional costs, please call for an estimate.
HUD-1 Settlement Statement
The HUD-1 statement itemizes the services provided to you and the fees charged for those services. Signature & Stewart Settlements will prepare this statement using the information they have collected regarding the sellers' loans, homeowner association dues and taxes and from the information provided from your lender. We will be happy to provide this document for your review prior to your scheduled settlement, but keep in mind that we will not be able to complete the HUD-1 until your lender has sent us the final loan package. If your lender has not sent us their final instructions itemizing their fees the HUD-1 will be incomplete, leaving us the inability to provide accurate figures for your review prior to your scheduled settlement. This is why it is so important for you to get your information to lender quickly.
