The Loan Process, Closing Costs, and Buyer Don'ts: an Overview.

Make no mistake, there's quite a lot to do in order to get a mortgage loan. You would not be looking up loan information if it were possible to get a loan in one day by filling out a simple application. But Innovative Mortgage Services, Inc does the heavy lifting so you can concentrate on your life rather than the mortgage loan.

Getting a loan involves four major milestones.

Step one: Speaking with your Loan Officer. You will first need to speak with your chosen mortgage professional to inform them of what you are interested in doing. Are you looking to purchase your first home, move up to a larger home, refinance an existing property, or buy a vacation home, etc? After asking some specific questions as to your long and short term housing goals, and listening carefully to what you say, we can narrow down the types of loans that may be suitable for your situation.

Step two: Get Pre-Approved for your loan. This is where Innovative Mortgage Services, Inc can begin to save you money. You'll supply your employment, asset, and residence history information. We will get your credit report and score (only after you give your permission) Then, after we've finished reviewing your information, we'll give you a Pre-Approval Letter. Handle it with care — it is a great tool when you make your offer! Your REALTOR® will likely use the Pre-Approval Letter in order to make the best offer on the home you choose.

Be prepared to provide ALL of your financial and employment information. The key to a smooth underwriting process is to provide supportive documentation of exactly what the underwriter may request, not what you think should be sufficient. Just remember, proper documentation is the key!

Step three: Apply for your loan. After you've signed the offer and the sellers have accepted, you will need to apply for the loan. This is the step that involves signing the loan application documents and disclosures. Once received by the mortgage broker and sent to underwriting, you will receive another set of documents directly from the chosen lender for your reference. We can then order the appraisal and survey, request evidence of insurance, as well as verification of employment, etc.

Step four: your loan is funded. The agents will find a title company to handle the "funding" of the loan and closing. We'll work with this company to ensure all the papers your lender needs are available, and you'll likely sign all these papers at their office if the closing is local. If you are purchasing from a separate location other than where you currently live, the title company will coordinate a mail away closing package for you. We do all the work to coordinate with this company to set the closing date with you and the lender.

Closing Costs

All residential real estate transactions incur costs. Buyers and sellers almost always share these costs, as the sales contract specifies.

At Innovative Mortgage Services, Inc., we are highly experienced in mortgage lending, so we can provide you with a comprehensive report on costs related to your mortgage in your "Loan Estimate".

Loan-Related Closing Costs

Loan Origination or Administrative Fee
This covers the administrative expenses in setting-up and underwriting the loan. The fee may or may not be a percentage of the mortgage amount.

Processing Fee A 3rd party state licensed Processor is an invaluable part of the mortgage process. The Processor will order the Verification of Employment (VOE), Verification of Rent (VOR) if applicable, as well as ordering the title and hazard insurance documents, making sure they are prepared per the lenders request. The Processor will continuously review the file to verify all documents and disclosures are within the strict government guidelines that are in place, to keep the file in compliance.

Points (optional)
An option for the home buyer is to pay points to lower the interest rate at which the loan will be repaid. Each point equals 1 percent of the mortgage amount. For example: on a $150,000 loan, 1 point would equal $1,500.

Appraisal Fee
The fee for having the house appraised will be paid by the buyer directly to the appraisal company at the time the appraisal is ordered.

Credit Report
The lender uses a credit report to determine the creditworthiness of the loan applicant. This fee is often paid when the applicant is getting pre-approved.

Interest Payment
Typically the buyer is required to pay interest on the mortgage loan to cover the time between the closing date and when the first mortgage payment period begins. For example: If closing is on May 15. Your first monthly payment begins to accrue interest on June 1 with your first mortgage payment due July 1. At closing an interest payment covering the accrual period between May 15 and May 31 may be required.

Escrow Account
At closing a payment may be required to fund the escrow account if the lender is paying home insurance, property taxes and/or other expenses out of the escrow account.

Buyer Dont's, and Things to Avoid During the Mortgage Process.

What's more fun than buying a bunch of new furniture to go in your future home? Not much. But making big ticket purchases before closing could be trouble. There are still a few major hurdles to jump before closing. We have listed some actions below we suggest you avoid when waiting for your loan to close.

Don't overspend on big-ticket items. Although you may be planning ways to turn your new house into a castle, avoid big ticket purchases like appliances, electronics, or furniture. You will also want to avoid vacations and car purchases until the closing of your loan. Your lender may send up red flags if you finance your furniture on your credit cards during your loan process. Because lenders are examining your financial accounts, a large cash purchase is also a bad idea.

Don't have your credit pulled. During the loan process, the lender will be watching your credit history very closely, and will likely perform a soft pull on your credit report prior to closing. This is done to verify that no new debt has been established that is not showing on the original credit report used in the underwriting process. Any new inquiries will result in a delay, as the borrower will need to explain the reason for the inquiry, and what the outcome was. If any new debt was taken on, the borrower's Debt to Income ratio (DTI) will have to be re-evaluated, and this could in fact result in your loan being denied.

Don't look for a new job. Lending Institutions like to see a consistent job history on your application. Getting a new job may not affect your ability to qualify for a mortgage loan - particularly if you are improving your salary. But for some, changing careers during the loan application process might raise concern and hinder your application and/or approval.

Don't change banks or move money around in your bank accounts. Bank statements from the last few months for accounts in your name (savings, checking, money market, and other accounts) will likely be studied as the lending institution makes decisions regarding your approval. In order to eliminate fraud, lenders will need a consistent portrayal of how you earn your living and where any additional funds come from. Even for practical purposes, transferring funds or changing banks may make it more difficult for your lender to document your bank history.

Don't deposit cash or make any large deposits into your bank account. The underwriters will need to review your recent bank/asset history and confirm where any funds used in the transaction are coming from. Any large deposits into your bank account that are not associated with your normal income will be scrutinized. Simply put, cash cannot be traced. There are very few circumstances where the underwriter will allow a large cash deposit to be used in the transaction.

Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until the completion of the deal, the good faith money actually belongs to you. Your seller might not realize that these good faith funds is to be applied to your expenses upon closing. An attorney or other type of neutral party such as the chosen title company can hold your earnest money, or you may put it temporarily into a trust account until closing. Your contract should indicate who keeps the earnest funds if the transaction does not go through.

Call or email today for more information!

You can also Apply Here at the Innovative Mortgage Services, Inc. corporate website!

Kenneth E Rivard (Kenny)

Licensed Mortgage Loan Originator

NMLS Originator ID: 330416

Innovative Mortgage Services, Inc.

NMLS Company ID: 250769

Phone/Text: 239-470-6484

eFax: 1-866-313-5708

eMail: Kenny@MyFlaHomeLoan.com