20 Easy Steps to Home Ownership (Part 2/4)

If you have not seen the part 1/4   please follow this link

20 Easy Steps to Home Ownership (Part 1/4) A guide to buy a home and the process step by step

6) Title Commitment / Title Search

Loan processor needs to order the title Commitment, A Title Commitment is a promise to issue an insurance policy on a piece of property. A Title Commitment is equivalent to a binder for other types of insurance, which commits, or binds, the insurance company to issue the policy as set forth in the commitment. 

A title researcher visits the local title office records, and retrieves current ownership and lien records whether they exist. It can be any liens/judgments/lawsuits against the property. So, any liens/encumbrances against property at time of selling must be paid in full at closing by seller by default.  To verify the boundary lines of the property Real estate property should be surveyed,  a survey is not forceful. Remember:  Your realtor needs to make sure that title does not have  any problem and if there is something that he/she finds, he/she(realtor) needs to tell you about any issue that is found in title, this protects you (the buyer/borrower) from any title discrepancy and the protects the  lender too.

7)  Documentation

Paperwork supporting the application must be given to the loan officer as: Proper information, Paystubs, two year's tax returns (if required), bank account statements verifying the source of your down payment funds to close and reserves (if required and not in all cases) and loan officer will give these paperwork to the Loan Processor.  Remember: To speed up your process, give the complete documentation requested by the loan officer. Loan Programs/Options depends a lot from your needs/wants/situation and FICO Score.

8) Mortgage Insurance

Many lenders require that borrowers carry with mortgage insurance when the down payment it is less than 20% of the value of the property, mainly if it is a loan program for "A" Paper loan or Conforming program. Remember: That protects the lender from the investment for future hazards that can occur (Not applied on all loan programs). 

9) Processor Review

Loan processor will order and package all pertinent information to be turned to the lender's underwriter, including any explanation that may be needed, such as: derogatory credit.

10) Underwriter Review

Based on the information put together by the loan officer and the loan processor. The underwriter makes the final decision whether loan it is approved or not. Lenders are looking for a borrower who will make payments on time and for property that will cover the cost of the investment if a buyer defaults.

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