WHAT RESPONSIBILITIES DO I HAVE DURING THE LENDING PROCESS?

To ensure you won't fall victim to loan fraud, be sure to follow all of these steps as you apply for a loan:

Be sure to read and understand everything before you sign.
Refuse to sign any blank documents.
Do not buy property for someone else.
Do not overstate your income.
Do not overstate how long you have been employed.
Do not overstate your assets.
Accurately report your debts.
Do not change your income tax returns for any reason. Tell the whole truth about gifts. Do not list fake co-borrowers on your loan application.
Be truthful about your credit problems, past and present.
Be honest about your intention to occupy the house.
Do not provide false supporting documents.

Making an Offer

So, you've got the house picked out and you're pre-approved you're ready to make an offer!! We recommend having an attorney write your offer and having a title company prepare the closing statement. But there's a little more homework you have to do:

Know Realistic Loan Terms

The first thing you need to know from a lender is what current realistic loan terms are for people with your credit and job history. This is because part of the offer to purchase contract will usually contain a financing contingency, and you will have to specify what interest rate and downpayment you expect to get financing for. If you are unable to get the financing as noted in your offer, you may need to cancel the deal.

Careful with the Requirements!

It's very tempting when making an offer to write it so that you get every small advantage you can; a lower purchase price, having the seller fix a whole laundry list of small items, a bigger tax pro-rated credit, etc. Just keep two things in mind: do you want the house, and whether you're creating headaches for yourself when your loan's underwriter sees the offer! If you want the house, make a reasonable offer. Sellers can and will turn down offers that have many repairs required, have home inspection clauses that allow the buyer to back out if even minor things are found wrong, have occupancy and closing dates that are unacceptable to them, and other terms that cause them real hardships. Balance this with your desire to get accepted! And, just a heads-up, if repairs are required under the terms of your contract, your loan's underwriter will require proof they were completed. The proof can be contractor's bills or an appraiser's statement , but it can cause delays.

Attorneys

Having an attorney review a real estate offer for you is typically less than two hundred dollars. You can save that and more simply because the lawyer can negotiate in your best interest. They may be able to propose items that save you up-front costs, too.
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You will want to have this info for your appointment:

+ The address and preferably the legal description of the property.
+ Whom the attorney is to contact (the buyer or their attorney), along with their address and phone number.
+ The offer you have received, or if this is a preliminary appointment, you can discuss price strategy with the attorney if you're not sure.
+ Financing details: part of your offer may be the "financing contingency" which states that the buyer must be able to borrow the money and on what terms.
+ What is and isn't included in the deal (example, appliances, etc). If you don't have this information, your attorney will help you with this. It's just more desirable to be prepared.

Appraisals

Inside Story Headline

An appraisal is a snapshot analysis of a home's value as compared to recent similar sales. It is one person's opinion, the appraiser's, using factors such as the square footage, number of bedrooms and baths, neighborhood, and amenities to determine how similar the home is to homes that have sold recently in your area. Appraisers are licensed in the state of Michigan to review sales of comparable homes to support an asking or selling price.

Because appraisals are scrutinized carefully by the lender's underwriter both before and after the closing, don't expect the appraisal to come in with a value much higher than your purchase price, even if you believe the house is worth more. The appraiser will simply tend to be a little more conservative on their opinion of value. Comparable sales should be as near-by as possible, as recent as possible, and the home's style and size should match as closely as possible. In some cases, the appraiser will have a dozen home sales to choose from to determine the value. When they are choosing comparable homes, they will choose the safest options among all the home sales they look at.

Title Insurance

What is Title Insurance?

Title Insurance is a policy that protects the buyer's lender (and by extension, the buyer) against ownership claims up to the amount of the mortgage. The insurer checks with the Register of Deeds for any outstanding liens, judgments, or attachments to the property. They check to see that the seller has a clear title to the property and that the taxes are paid. They will also check for judgments against the buyer. If any of these are found, they are noted on the policy as 'exclusions'. Other typical exclusions: utility easements, the current owner's (seller's) mortgage, and the current year's taxes.

What is it For?

The buyer's lender won't issue the loan until it is satisfied with the terms of the policy. If there are exceptions like tax liens or unsatisfied mortgages, the sale won't go through until they are cleared up. Claims on title insurance are rare.

Who Needs It?

Sellers purchase the policy, and the buyer's lender will require what is known as a simultaneous loan policy. The buyer needs the loan, and lender won't issue it until the policy is clear. The seller (who orders it) needs it so the sale can close with the buyer. Obviously, this isn't needed in a cash sale. In a cash sale, the buyer may still request it, but may be satisfied with a letter report (also available from title companies).

Closings

Title companies are experienced at closings. The arrangements are typically made by your lender, and the lender usually chooses the same company that issued the title policy (which was, in turn, chosen by the seller).

WHAT CAN I EXPECT TO HAPPEN ON CLOSING DAY?

You'll present your paid homeowner's insurance policy or a binder and receipt showing that the premium has been paid. The closing agent will then list the money you owe the seller (remainder of down payment, prepaid taxes, etc.) and then the money the seller owes you (unpaid taxes and prepaid rent, if applicable). The seller will provide proofs of any inspection, warranties, etc. Once you're sure you understand all the documentation, you'll sign the mortgage, agreeing that if you don't make payments the lender is entitled to sell your property and apply the sale price against the amount you owe plus expenses. You'll also sign a mortgage note, promising to repay the loan. The seller will give you the title to the house in the form of a signed deed. You'll pay the lender's agent all closing costs and, in turn, he or she will provide you with a settlement statement of all the items for which you have paid. The deed and mortgage will then be recorded in the state Registry of Deeds, and you will be a homeowner.

Home Inspections: Inside Story Headline What a Home Inspection Is.

A home inspector will typically check the heating, central air, plumbing and electrical systems; the roof, attic, and visible insulation; walls, ceilings, floors, windows and doors; the foundation, basement, and visible structure. The buyer will get a written report of the inspection, and many will give a copy to the seller. Professional inspectors have a huge checklist of items to review, and it is easy for a buyer to miss things. Plus, if a problem is found, the contract may need to be re-negotiated or scrapped altogether. This is why a professional inspection is recommended for buyers.

Who Should Hire One?

You should hire an inspector if you are buying a home. Even if you are a pretty good home handyman, be realistic about how well you are able to diagnose foundation problems (inspectors can find bulging walls that are imperceptible to the eye), water pressure, sewer, or drainage problems, electrical circuitry problems, and roofing problems. Remember too that the inspector, as a neutral third party, can provide evidence helping you re-negotiate the purchase contract with the seller.

Be Present for the Inspection

Accompany the inspector and ask him/her to explain everything thoroughly. You'll learn a lot about the house, even if you're already a very knowledgeable person, because this is a very close-up inpsection of your particular chosen home.

If Problems are Found:

First, often items noted on the inspection report are not going to be serious enough to count as defects as defined on the standard offer to purchase. But if you decide to give the seller notice of an objection, what happens next is determined by how your contract is written. A lot will depend on if you have chosen to give the seller what is known as the right to cure or not. This can get very complex and can even botch a deal. Consult an attorney.

WHAT ARE "HOME WARRANTIES", AND SHOULD I CONSIDER THEM?

Home warranties offer you protection for a specific period of time (e.g., one year) against potentially costly problems, like unexpected repairs on appliances or home systems, which are not covered by homeowner's insurance. Warranties are becoming more popular because they offer protection during the time immediately following the purchase of a home, a time when many people find themselves cash-strapped.