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A Guide to Mortgage Paperwork: What Homebuyers Should Expect

19-SDHousing-0616-Sept2019_MortgagePaperwork

Ready to dive into the world of homebuying? You're likely going to encounter a handful of paperwork along the way, at various stages of the process.

Here is a rundown of a few of the documents you'll likely see.

Application

Your mortgage application will often include a variety of questions about your personal financial situation, history of employment, household sources of income and, often, information about the property in question once a home has been selected. When submitting a mortgage application, you might be asked by a lender for previous tax returns, pay stubs, bank statements and/or photo ID.

Loan Estimate

Once you've applied for a home loan, a lender is required to provide you with a loan estimate within three business days. The loan estimate is a document that outlines what your interest rate would be, an estimation of your monthly mortgage payment and the approximate closing costs for the loan. There may also be additional piece of information about a given type of loan, including whether there are prepayment penalties or other features specific to the product.

Offer

An offer document or "agreement to purchase real estate" is a piece of paperwork that you and your real estate agent will complete when you're ready to make an offer on a property. The information on this document will include your desired purchase price, the amount of your downpayment and a proposed closing date. It will also likely include a listing of any items that you'd like included in the purchase (such as kitchen appliances), as well as contingencies (such as repairs you would like the seller to cover before closing).

Appraisal

An appraisal report is drawn up when you've placed an offer on a home. This is often ordered by the lender, and it offers perspective on the property's assessed value. Information included on an appraisal might include neighborhood data, known historic home improvements, an actual monetary value and comparable prices in the vicinity.

Closing

When purchasing a home, paperwork included in the closing process might include an escrow statement that outlines the first year of mortgage repayments, including taxes and insurance; a deed of trust, which protects the lender in case you fail to make your mortgage payments; and a closing disclosure, which is given to you at least three days before your closing day. 

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Topics: Homeownership, Featured Blog

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