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So, you͛ve decided you can afford to purchase a home! There are three truths you need to

know.

1. ÷





 ›ou will be required to have a minimum amount of

your own money for the application fee, down payment, or closing costs, even for loans

that say no down payment or closing costs.Credit reports, appraisals, home inspection,

fees, and homeowner's insurance policies usually have to be paid up front, by the Buyer.

In some cases, the fees can be refunded at closing.

2. ›









In most cases, you cannot take out

an unsecured loan to come up with your minimum investment for the application fee,

down payment, or closing costs. ›ou must save the money yourself or show that the

funds came from a secured, or collateralized, loan.

3. ›





›


  





 
  



 In most cases, the person making the

decision on your loan is not your Loan Officer, but an Underwriter, usually located in

another city or state. The Underwriter must be able to pick up your file, look at the

documentation, and be able to tell exactly what your situation is, without ever speaking
 to you. The more complete, accurate and clear your documentation is, the faster your

loan will be approved.

All of the documentation you are asked to provide verifies the information needed to meet the

requirements of one of these three basic truths. Documentation you likely will be asked to

provide includes:

y ›our most recent pay stubs to cover a one-month period. If you receive income from

alternative sources, such as Social Security, a pension, assistance money, investment

income, child support, alimony, Tribal payments, royalties, seasonal unemployment,

etc., you will need to document those also.

y |-2s for all jobs in the past two years.

y Tax returns for the previous two years, or a year-to-date profit and loss statement and

business tax returns and schedules if you are self-employed.

y ›our past two months͛ bank and investment statements.

y A list of your current monthly bills, including credit cards, car payments, student loans,

child support, alimony, signature loans, installment loans, debt management programs,

etc. These should show the current balance, minimum monthly payment, and account

number.

y If you are not an American citizen, a copy of your Green Card or U.S. visa and Social

Security card.

y If applicable, a complete divorce decree, including property settlement and stipulations.

y A copy of any bankruptcy papers.

|ho all might be involved in the real estate process?

y The buyer

y The seller

y The lending institution

y The loan originator or loan officer

y The real estate agent

y The real estate attorney

y The home inspector

y The appraiser

y The surveyor

y The underwriter

y The mortgage insurance company

y The homeowner insurance company

y The title or abstract company

y The closer

y The servicer

›ou need to choose a lender carefully, as you may be in a business relationship with that

institution for many years. Start by talking to the loan officer at the bank where you keep your

checking and savings accounts, or ask friends who have purchased a home for

recommendations. ›ou should interview several lenders before making your decision. Be sure
you are comfortable with the loan officer, as well as the institution. They should return calls in a

timely manner, explain options, give you down payment and closing cost estimates, and explain

documents and terms in a way you can understand. The Good Faith Estimate should itemize the

expected cost for fees and the Truth-in-Lending Statement will show the full cost of financing

your loan, including the annual percentage rate, principal, and total interest. The loan officer

should tell you which loans you are qualified for and what their differences are.

Compare the loan programs, terms, costs, and attitude of each lender and choose the one that

is best for you.

Bill Taylor
|eston County Extension Office

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