The More You Know, the Easier It Can Be
When it comes to getting a mortgage loan, you need to feel certain about the choices you make. One way to gain confidence is to learn all you can about the loan process.
Your first step in getting a mortgage loan is submitting an application (Uniform Residential Loan Application). We can help you complete the form. The application simply provides us with a better understanding of your personal and financial information, as well as identifies the property and the reason for the loan.
After an application is completed, with your approval, we will order a copy of your credit report to review your payment history with other creditors. Once we receive your credit report, we will be able to discuss the specific products we may be able to offer you, as well as the timing to complete the process.
Within three business days after a completed/signed application is received, we will provide you with an estimate of the terms and fees of the loan. Before providing a final approval, we will take your specific situation into account including, but not limited to, the property appraisal and your income.
Loans for the purpose of purchasing a home are more complex and involve more parties than an ordinary refinance loan. First Penn Financial Group, state and federal governments have specific requirements, including specific information that must be disclosed during the process. If you apply for a loan to purchase a home, we will provide you with the following information/disclosures:
- “Settlement Costs and You” booklet
- Advanced Truth-In-Lending disclosure
- Transfer of Servicing disclosure
- Right to receive appraisal notice
- Handbook on Adjustable Rate Mortgages (if applicable)
- State specific and product specific pre-disclosures
How much can you borrow? The current value of your home, determined by the appraisal valuation of your property (conducted by a third party), will determine how much you can borrow. This valuation is even more important since your property is used as security for the loan.
What is an appraisal?
Your appraisal will provide you and First Penn an opinion of the value of your home. Appraisals represent an estimate of the price you would get if you sold your home today. Your appraisal will compare your home’s value to the value of other homes in your neighborhood, especially homes that were recently sold. An appraiser is hired by First Penn to determine the fair-market value of a particular piece of property.
Who performs an appraisal?
We works with a number of appraisers nationwide who adhere to the Uniform Standards of Professional Appraisal Practice (USPAP).
Researching the title of your property protects both you and First Penn during the loan process. Title to the property demonstrates that you, the borrower:
1. Own the property
2. Have the authority to use the property as security for your loan
The title also shows what other mortgages or liens may be recorded against the property and whether the property taxes are paid.
A title search is an examination of the public records to determine the ownership and encumbrances affecting your property.
A title report indicates the current state of the title, such as easements, covenants, liens and any defects. A title report does not describe who owned the property over a period of time.
A title insurance policy protects the holder from any losses sustained due to problems with the title itself. Title policies insure both you and First Penn against most claims to the title of the property.
Like hazard insurance, the property taxes must be paid whether or not there is an escrow account. Unpaid property taxes become a lien senior to a mortgage and, depending on the laws within each state, property can be sold for delinquent taxes. A lien holder can suffer a significant loss if this happens.
When the loan is fully approved, it goes to closing. Closing includes the delivery of a deed, finalizing and executing (signing) documents, and disbursing funds to pay off loans or provide cash to the customer (funding).
Recording a document is simply the process of making the existence of the document a part of the public record. The document is noted by the county recorder’s office or the registrar’s office and marked with the date and time of recording. The document is usually microfilmed and becomes available to anyone who reviews the public records. If a deed of trust or mortgage isn’t recorded, then a title company is unable to find it in public records. Another lender could make a loan using the same property as security for its loan not knowing that another loan is out there.