|
Once your loan has been approved, the clock
starts ticking to closing day. Much remains to be done during those
few weeks, and most of it occurs behind the scenes.
 |
You can help speed the process by: |
|
|
|
|
Here's what's happening while you wait:
Underwriting verification
Your lender's team of underwriters springs into action, verifying
the information on your application and supporting documents. They
will call your employer, for instance, to verify that you work in
the job and at the salary stated on your application. The amount
of verification involved depends on how risky your lender perceives
you to be.
Appraisal
Your lender will require an independent appraisal of the property
prior to closing, the outcome of which could affect the rate and
terms of your mortgage. The work will be done by a licensed appraiser,
who will arrive at an expert's estimated value of the property based
on physical inspection and a sampling of comparables or "comps"
-- prices paid for comparable properties that have recently sold
in the neighborhood. Cost of an appraisal typically runs between
$300 and $500.
Title search and title insurance
Your lender doesn't want to lend money against a house that may
have claims or other encumbrances upon it. That's why a title company
performs a title search.
The title company will go to the county courthouse
and research the history of the property, looking for encumbrances
such as mortgages, claims, liens, easement rights, zoning ordinances,
pending legal action, unpaid taxes and restrictive covenants. The
title insurer then issues a policy that guarantees the accuracy
of the work. Your lender will require a title policy that protects
the lender. In some cases two policies are issued, one to protect
the lender and one to protect the property owner.
Flood certification
Lenders also want to know whether the property you're buying is
in a flood-prone area. They will hire a vendor to analyze your property
and neighboring sites to determine if it's in a flood zone; their
report is called a flood certification. If the answer is yes, you'll
be required to buy flood insurance because most standard homeowners'
policies don't cover damage from rising water.
Survey
Some lenders also will require that a home's property lines be verified
by a professional survey.
|
Chapter 5: Underwriting
