This booklet issued by the Consumer Financial Protection Bureau contains much useful information:
Financing your new home purchase begins with a consultation with a qualified loan agent. You will want one with strong, local experience with purchase transactions in the San Francisco market: Do not use an out-of-area loan agent or lender, as that often has very unhappy ramifications, financial and otherwise. We have a list of qualified loan agents that can help you with the process. These are lenders, who have a track record of closing on time and making the process as smooth as possible for you while also offering competitive rates.
There are a wide array of loan options, and choosing the one that works best for you will depend on a number of factors: your financial wherewithal and future plans, the monthly housing expense you are comfortable with, cash available for the down payment and closing costs, how long you plan to own your new home, etc. You may wish to consult your accountant regarding financial and tax implications.
I highly recommend exploring multiple options depending on your situation.
Your home search should begin with obtaining formal loan pre-approval—so that you fully understand your financing options, what you can afford, and what your closing costs and ongoing housing expenses will be. These days pre-approval is not enough. Most buyers are getting fully underwritten so they can write non-contingent offers. Your loan agent will guide you through the underwriting process, which involves the submittal, to chosen lenders, of your loan application and accompanying documentation regarding employment, income, assets, debts and credit history.
Going through the underwriting process is often a tedious, time-consuming hassle and involves the collection of many documents your lender requires. But it has to be done, and the sooner it is completed, the more you’ll know about your options and the better prepared you will be for finding the right home and making a successful offer. Make the effort as soon as possible and get it done.
You have already been loan pre-approved; now the lender must approve the specific purchase terms and the property itself. This involves review and approval of the purchase contract, the property appraisal, the Preliminary Title Report, and any other supporting documentation required. Depending on the lender, the property and specific circumstances, this process typically takes from fourteen to thirty days.
The property has appraised satisfactorily and all supporting documentation approved by the lender. The lender issues a formal loan commitment letter, and the purchase contract’s loan contingency is removed.
After formal loan approval, the loan documents are drawn up and sent by the lender to the title company. The best idea is to request the full set of closing documents for your review prior to going to the title company to execute these documents — that gives you time to read them carefully and get any questions answered. At the title office, you will sign the entire package of closing documents; they are then notarized by the escrow agent and the loan documents are returned to the lender for final review and funding.
The lender funds the loan, depositing the loan amount into the escrow account. You deposit any additional monies necessary to complete the purchase such as the remainder of your down payment and closing costs. These final monies are typically delivered by cashier’s check or bank wire.
The legal documents transferring the property into your name and the deed of trust pertinent to the property’s new loan are legally recorded with the County Clerk. The funds in escrow are then disbursed, as appropriate, to the Seller, the Seller’s lender and other involved parties or service providers. Escrow is closed, and you are now the owner of your new home! (But you have to make mortgage payments each month.)
Thinking of buying (or selling)? Call the Krishnan Team at 415-735-5867 for a no-obligation consultation. You can also email us at info@ruthkrishnan.com.
