What is the loan process?

After you have met with your lender, you may be confused on what happens behind the scenes...



Here is a little insight...



1. Meet with your loan officer. Decide what program is best for you.



2. Loan officer will run a credit report, and get a pre-approval from Fannie Mae or Freddie Mac.



3. Your loan officer will collect some documents from you to make sure that you able to buy a home. These documents typically include (and are not limited to) your past 2 years W2's and/or tax returns, copy of your driver's license and social security card, past 2 months bank statements, past 30 days paystubs.



4. Your loan officer will give you an application to sign with many different documents including the 1003 (loan application), the Good Faith Estimate (that shows what your closing costs are estimated to be), the Truth In Lending Document (that shows what your APR is), etc.



5. Once you are approved, if you are buying a home, you need to write a contract and give your realtor (or someone who is involved) your earnest money. If you are refinancing, no earnest money is involved.



6. You will decide with your loan officer (once you have a property address) if you want to lock into a rate or keep it floating.



7. An appraisal and title are ordered on the property.



8. The loan officer sends the loan through to the processer to:

a) reconcile the loan file

b) review the appraisal, title, credit report

c) prepare submission package

d) comply with Lenders' approval requirements (they differ for all investors)

e) schedule and coordinate closing



9. The loan is submitted to underwriting for approval.



10. If the loan is approved, the closing documents will be prepared, and the customer will receive the HUD-1 Settlement Statement no later than 24 hours before closing



11. Either the title company or the lender will close the loan for you, and the funds will be sent to realtor, title company, insurance company, seller, etc.

Secondary Market

What is the Secondary Market?

The Secondary Market is a group of investors (mainly banks), that will buy a mortgage from a mortgage banker or mortgage broker.

What are the benefits of selling loans to the secondary market?

For lenders:

-creates liquidity for them to create more loans
-allows lenders to generate more money for more loans
-allows lenders to transfer the risk on to the investor

For borrowers:

-Makes the process more efficient
-Allows for the creation of new loan programs ~ meaning more options
-Helps to maintain LOWER INTEREST RATES

No more tax credit? You may be eligible to still get $ from the government!

Yes, we are all sad that there is no more tax credit for first time home buyers. However, if you live in Missouri, you may still be able to get money out of the government.

MHDC or the Missouri Housing Development Commission offers a Cash Assistance Loan. This means that MHDC gives you 3% of your down-payment, and being that FHA only asks for 3.5% down, you would only need to bring in 1/2% as a down-payment. If you are buying a $150,000 home, you are getting $4,500. This is not a bad deal.

As with any loan, you have to qualify for it...there are some extra qualifications for MHDC....

1. You must be a first time home buyer.
2. You can not buy a home over the amount of $258,690 in a non-targeted area. (Targeted areas are labeled by MHDC)
3. The income level (in St. Louis) of a 1-2 person household cannot exceed $67,900. It doesn't matter if someone living in a house is on the loan or not, their income must be counted.
4. The 3% that MHDC will give you is considered a "forgivable loan". This means that every month you live in the home, more of the loan is forgiven (in other words, you don't owe it anymore). After 5 years, the entire loan will be forgiven.
5. You must occupy the home within 60 days of closing.

For more information on this, feel free to contact myself or go to the MHDC website.... http://mhdc.com