Buying a home can’t help but be about as thrilling a purchase as you can make, whether you’re a first time buyer or an experienced homeowner. ‘Buying’ a local mortgage, on the other hand…well, the experience may be slightly less exciting, but if your team has managed to secure a good one, it’s actually a comparable accomplishment.
In the same way that it’s the features and condition of your new Indianapolis home that give it extra value, there are multiple elements of a local mortgage that make signing on the dotted line an action you look back on with satisfaction. Having a knowledgeable Realtor® on your side is one part of making sure that happens—knowing how the process works, familiarizing yourself with the terms involved, and fully comprehending the significance of the paperwork elements is the other part. Here is a brief overview of the key elements that come into play:
· Being 100% clear about the financial terms prior to signing is the primary order of business. How much you will be paying each month, how much your interest rate is, whether it is fixed or variable, what additional costs accompany your mortgage—this is the ‘meat-and-potatoes’ of your loan.
· An application fee is the charge that covers the lender’s costs for processing your application. This sometimes includes the credit report and property appraisal—you’ll want to know whether these fees were included as part of your application fee.
· An appraisal fee is included to make sure your home is professionally appraised (it may or may not be part of the application fee).
· A loan origination fee includes the additional expenditures associated with your application. It’s usually presented as a percentage (point) of the loan amount.
· Title insurance covers the title search that investigates whether the property is lien-free. This also covers the legal recording costs, and indemnifies against legal costs for defending the property from future claims. It can sometimes pay to comparison shop between title companies.
· Other amounts may also be included: if, for instance, you and the seller have agreed upon certain things, those details will be listed and costs added onto the total of your mortgage. Property taxes and insurance may also be prorated and included in the monthly payment.
Before the closing, expect to receive a HUD-1 form—the federally-mandated settlement statement that lists all fees, charges and costs. If there is a problem, this is the time to address it. And keep this and the other papers in a safe place…and remember where they are! You’ll save time later, because some of them may be required in future financial dealings. You will also receive a final Truth-in-Lending statement, a mortgage note, and a Deed of Trust. It’s important to make sure all the due dates are clearly understood—it’s not a bad idea to list them on your own personal “To Do” sheet to keep track for your own reference.
If you are thinking of buying a home in Indianapolis this summer, it’s time to get pre-qualified now. Contact me for an introduction to an experienced mortgage broker—then we can get started with the fun part: finding your future home!