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LESSON 20: WHAT HAPPENS NEXT -- BEHIND THE LENDER'S
CLOSED DOORS
(continued from previous page)
2) Title search/insurance
-- A lender doesn't want to loan money against a house only to find
that it has outstanding liens,
encumbrances or mortgages against it. Such liens could keep the
lender from recouping its money in the event of a forced sale or
foreclosure.
So an essential part of any closing is having the title
of the home researched.
A third-party company will go to the county courthouse
and dig up information about any outstanding liens or other claims,
then provide a title
insurance policy guaranteeing the accuracy of its work. In some
cases, two policies are issued -- one protecting the new owner and
one protecting the lender.
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An encumbrance
can be a zoning ordinance, easement right, claim, mortgage,
lien, pending legal action, unpaid taxes or restrictive covenant.
An encumbrance does not legally prevent transfer of the property
to another.
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3) Flood certification -- Lenders
want to know whether properties they're loaning against lie in flood-prone
areas. Those that do require flood insurance. During this step,
vendors analyze home sites to see whether they fit the bill.
Standard homeowners' policies don't insure against flood damage
-- only against damage from rain that comes through a broken
window. So while your new property may not require flood insurance,
the average $350 per year premium could prevent a catastrophe. |
4) Survey -- Some lenders
will require that a home site's boundaries be verified via a survey
of the property.
Property appraiser -- The
individual who estimates the value of the property you're buying.
The appraiser examines the property and considers the most-recent
comparable sales from the surrounding neighborhood.
Title company -- The company
that examines and insures the title to the property you're seeking
to buy.
Surveyor -- The individual
who measures the land, shows the location of the land with reference
to known points, its dimensions, and the location and dimensions
of the home and any outbuilding.
Home inspector -- The building
professional who evaluates the structural and mechanical condition
of the property you're buying, including the roof, heating, plumbing,
electrical and air conditioning systems. This role will be explained
in the next lesson.
These steps can take anywhere from a few days to a
couple of weeks, depending on how busy the lending market is in
your area. We'll talk more about what these things cost a little
later.
PUT
YOUR LOAN ON THE FAST TRACK
•Gather
and take the necessary documentation with you when you first
apply for a loan.
• Respond promptly to
your lender's request for more information.
• Call your lender and
real estate agent to check your application status.
• Help contact others,
such as employers, who may need to provide documentation
•Keep records of your
conversations with the lender.
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You are entitled
by federal law to a copy of the property appraisal, which
you should examine closely if you think the appraisal is
low. In some cases, you can make a case that the valuation
estimate should be raised. You could show that the appraiser
overlooked a significant feature of the home, for example,
or failed to consider the recent sale of a comparable
property at a higher price.
In most cases, if the appraisal
is more than six months old, you will need to get a new
one because real estate markets can change a lot.
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