Disclaimer: Please seek the advice of a professional loan officer to determine exact payments and associated costs as well as loan options that best fit your financial situation.
Application Paperwork: Once you have given all preliminary information to your loan officer, your lender sends verification forms to your employers, banks, and current mortgage company or landlord, and also orders the credit report and appraisal. You sign a release to authorize these steps. Your lender will provide you with a Good Faith Estimate and a Truth-in-Lending Disclosure.
Good Faith Estimate:
The Good Faith Estimate lists the estimated costs you will incur at closing. Some of the numbers listed on this form are prorations, subject to change based on the actual date of the closing. Others are set fees that should remain the same.
The Truth-in-Lending Disclosure shows the total cost to you, over the term of the loan, for your specific financing. The calculation is based on the assumption that you own the home and make regular payments throughout the term of the loan.
Verification of Employment:
The lender sends Verification of Employment (VOE) forms to all employers for the last two years. The employers complete, sign, and return the forms to the lender. The forms show the dates of employment, the amount of money you earned last year, and how much you have earned so far this year. The VOE documents bonuses and overtime you earned.
Verification of Deposit:
Verification of Deposit (VOD) forms go to each banking institution listed on your application. The institutions indicate the date you opened each account, average balances for the last three months, and the amount of money you have in each account on the day they complete the form. Any loans or overdraft accounts you have with the bank will also be shown.
Verification of Mortgage:
Mortgage companies and landlords complete Verification of Mortgage (VOM) forms. These show the lender how much you owe, the amount of your monthly payment, and whether you make your payments by the due date.
Your credit report shows the amounts of money you owe to each of your creditors, minimum monthly payments, and your payment history.
The appraisal confirms the value of the home you are purchasing for you and your lender.
Typically, several weeks pass as these reports and forms are returned to the lender. If any delays are encountered, the loan officer may contact you for assistance. The credit reporting agency may call you to verify that the information they have gathered is correct. Once the loan processor has collected this standard documentation, you may be asked to write letters describing your assets, income, or credit. Few loans are finalized without requests for additional information just before the package is submitted to the underwriter for final approval. At this point you may become frustrated with the loan process.
Please remember that your lender requests these letters to assist you in obtaining your financing. Do not hesitate to discuss your concerns with your loan officer. Perhaps he or she can provide some additional insight on what may seem to be redundant requests.
Loan Amount Requested:
Before the processor submits your file to the underwriters for final approval, he or she will verify the final sales price. Make sure that copies of all addenda such as change orders signed after the original purchase agreement was completed have been sent to the lender. This assists the lender in determining the exact loan amount. If change orders affect the total price after this point, you may have to resubmit your loan application for the higher amount; otherwise you would have to pay for the additional items in cash.
During your first meeting, you and your lender determine the timing to obtain prequalification. This allows us to start the home even though final approval is still pending. You will discuss additional items that you may need to obtain final loan approval. Several weeks after your first meeting with the lender, you should receive loan approval. If any of the documents requested have not been returned to the lender in a timely manner, approval may take longer.
Loan approvals often carry conditions of approval. Discuss any concerns you may have about such conditions with your loan officer and obtain any requested documentation as soon as possible. Once all contingencies are met the final loan can be approved.
Loan Amount Approved:
If you qualify for an amount that is less than you requested, ask your loan office what changes might qualify you for a larger loan. Or, consider omitting some items now (a deck or finished basement) and adding them to your home later. Another possibility is to talk to another lender with different programs and different requirements.
If, after your best efforts, you are not approved for a loan within 45 days of signing your purchase agreement, in accordance with your Purchase Agreement, Budron Homes has the obligation and the right to work with you to secure construction financing for you through its sources. If after you and Budron Homes cooperate, in good faith, to secure construction financing commitment through your sources and through Budron Homes’ sources fail, then Budron Homes will refund you any refundable potion of your deposit as agreed upon your signing a release letter.
The only thing anyone knows for certain about interest rates is that they will change. Do not rely on anyone’s predictions regarding rates. Locking your rate prematurely can result in extra expense if your new home is not complete in time to close within the lock period. We are happy to update you throughout the process of construction on the target delivery date. Until we reach a point in construction where factors outside our control can no longer affect the delivery date, the decision to lock your loan is at best a gamble.
Between the time your loan is approved and the date of your closing, remember that any significant changes in your financial circumstances could impact your loan approval. If your closing occurs more than 30 days after the lender issues your loan approval, the lender may order an additional credit report just prior to the closing date. Changes in your financial circumstances, for example, purchasing a new car or increases in your charge card will appear as a new liability on your updated credit report. Such changes may cause your lender to reconsider your approval. Holding off on such purchases until after closing is best.
Financing your new home is an ongoing process that takes place throughout the construction of your house. Our professionals work closely with you and the lender to make the process as smooth and as easy as possible. Below is a brief outline of how the loan process works:
1. Complete a Quick Credit Application: This is done at Budron Homes’ sales office and usually takes about 15 minutes. Budron Homes will submit the application to a loan officer of one of our preferred lenders.
2. Meet with Loan Officer: Our preferred Mortgage loan officer will contact you to set up an appointment to discuss your loan options and explain the loan process in detail. At this time you will make a formal loan application. In addition to ordering a credit report, which shows your credit and payment history, the loan officer will provide you with a list of additional documentation that will be needed, such as your pay check stubs, bank statements, tax returns, etc.
3. Receive Pre-Qualification. The loan officer will verify and review all information and documents related to your application, issue you a pre-qualification letter and begin preparation of the loan documentation.
4. Escrow is Opened: Once your purchase contract is accepted by Budron Homes, the seller’s agent will open escrow. An escrow company is an independent third party that holds moneys and documents related to the sale of your home until all conditions of the purchase and sale have been completed.
5. Loan is Underwritten and Approved: Once all the loan information has been received, reviewed and approved, your loan can be approved.
6. Lock in Interest Rate: Sometime between your loan application and ten days prior to close of escrow, you need to lock in your interest rate. Interest rates can change daily or several times a day. Budron Homes will not be responsible for locking interest rates or for the final interest rate for your loan.
7. Sign Loan Documents: This meeting takes approximately one hour and occurs one to two weeks before the close of escrow. We suggest that you arrange for Homeowner’s Insurance on your new home a minimum of three weeks prior to the anticipated close of escrow.
8. Loan is Funded: The mortgage company forwards the loan funds to escrow and the construction and/or the building permit process would start. You will receive the keys to your new home at modification upon construction completion and obtaining certificate of occupancy. Your deed of trust will be mailed to you from the Recorder’s Office approximately two weeks after the recording date.
Mortgage Calculators: Mortgage payment calculators allows you to determine your mortgage payment for different loan amounts, interest rates, and amortization terms, but should not to be relied upon for your home financing. Please seek the advice of a loan professional to determine exact payments and associated costs as well as loan options that best fit your financial situation.