Closing Disclosure – Commonly referred to as the “CD”, the Closing Disclosure is the form that provides the final details about the mortgage loan selected. It includes the loan terms, your projected monthly payments, and how much the consumer will pay in fees and other costs to get your mortgage.
Loan Estimate – Commonly referred to as the “LE”, the Loan Estimate is the form that the consumer receives after applying for a mortgage. The form provides important information, including the estimated interest rate, monthly payment, and total closing costs for the loan.
Prequalification can make your home shopping experience much smoother. Getting prequalified not only gives you a better idea of how much house you can afford, but also lets sellers know that you are serious about your home search. Getting prequalified is simple:
- Gather your personal financial information, such as bank statements, W-2 forms, and paycheck stubs and meet with your Aspire Lending mortgage professional.
- Your Aspire Lending mortgage professional will pull your credit report and evaluate your financial documents. With this information, you and your Aspire Lending mortgage professional are able to discuss the best home financing options that will help you achieve your financial goals.
- Aspire Lending will provide a prequalification letter that will indicate to your Realtor and the seller of the property that you are a preferred and serious potential buyer. Now you can relax and enjoy the process of looking for your new home!
Usually, you’ll need to provide documents that verify your employment, income and assets.
Typical loan programs require the following documents:
- A copy of your Social Security card
- Pay stubs for the last two months
- W-2 forms for the past two years
- Bank statements for the past two or three months
- Two years of federal tax returns
- Copy of your sales contract (if you’ve already chosen your new home)
In challenging economic times such as these, a good number of people have found themselves with financial difficulties. It’s important to differentiate between a person with a bad credit experience in the past and a person who is a bad credit risk.
You may hear questions such as:
- What circumstances caused the financial issue?
- What steps did you take to resolve the issue?
- What measures were taken to prevent the situation from occurring again? Have you reestablished yourself financially? Were the changes that were made the right ones?
If you have encountered more challenging credit problems such as foreclosure or bankruptcy, a more thorough explanation will be required. Typically, the more significant the credit problem, the more recovery time is necessary.
Everyone finds themselves in tough financial situations at one point or another, but don’t let previous issue prevent you from getting a fresh start!
Every person’s situation is unique – that’s why there are so many loan options available. We can assist you with finding the best loan product for your individual needs, taking into account some of the following questions:
- Do you anticipate your finances will change in the next few years?
- How long do you anticipate living in this home?
- Would an adjusting mortgage payment make you comfortable or uncomfortable?
- Is your goal to be out of mortgage debt?
Your Aspire Lending mortgage professional can help you find the right program to help you attain your financial goals.
A FHA loan is a loan guaranteed by the Federal Housing Administration. FHA issues specific guidelines for mortgages. A VA loan is a loan guaranteed by the Veterans Administration. To obtain a VA loan, the borrower must have served in the Armed Forces for a specific time period.
Your Aspire Lending mortgage specialist will advise you of the rates available for your loan product and you will have options on when to lock your rate.
The Annual Percentage Rate is the financing rate calculated with the finance charges over the life of the loan. The interest rate calculates the principal and interest payment for the loan.
PITI is principal, interest, taxes, and insurance: the components of a monthly mortgage payment.
Down payment amounts vary according to loan type. Your Aspire Lending mortgage specialist will be able to help you find a loan program that best fits your individual needs; depending on your situation and eligibility, you may find very low down payment requirements available. Mortgage insurance may be required for down payments less than 20%.
Similarly to car insurance, mortgage insurance protects against loss, requires payment of a premium, and is used in the case of an emergency. The lender is able to foreclose on the home if the borrower is not able to repay the amount of an insured mortgage loan; the lender can file a claim with the mortgage insurer for a portion or the full amount of losses.
If you make a down payment less than 20% of the purchase price, you will most likely be required to have mortgage insurance. Your Aspire Lending mortgage specialist can provide more details.
Reserve requirements vary according to loan program. Your Aspire Lending mortgage professional will discuss this information with you.
When you waive escrows, you take the responsibility of paying your taxes and insurance rather than having them included in your monthly payment. Waiving escrows may add a small fee to your closing costs. You can only waive escrows if your loan program allows for this, such as conventional loans that have a loan value of 80% or less on your first lien.
Truth-In-Lending’s are sent to all borrowers after a loan application has been made. The Truth-In-Lending Act is a federal law requiring lenders to reveal all of the terms of a mortgage. The APR that appears on your Truth-In-Lending will be higher than the interest rate on your Real Estate Lien Note, as it is calculated based on term and finance charges.
You may obtain a copy of your credit report through the credit bureaus. You will receive a copy of your appraisal at your closing.
Most transactions require an appraisal. A clear termite report is required on government transactions. If the termite report recommends treatment, treatment is required, along with a clear termite inspection. If the appraiser recommends repairs or if repairs are mentioned in the contract, the lender will require that those repairs be done before closing, as well as a final inspection to assure that the repairs were completed.
The Settlement Statement (HUD-1) is prepared by the title company according to closing instructions prepared by the lender. This is available 24 hours prior to closing by contacting the title company.
Your closing will take place at the title company. The title company name and address appears in your sales contract. Call the title company to schedule a time for your closing.
The second lien is often from a different lender than the first lien. Therefore, borrowers with a second lien will make two separate payments each month – one on the first lien and one on the second lien.
Refer to your “First Payment Letter” in your closing documents to determine where to send your first mortgage payment. If you receive a statement from your new lender prior to the due date of your first payment, send your payment to the new lender.
Otherwise, send your payment to Aspire Lending as detailed in your “First Payment Letter.” Remember to include your loan number on your check.