Information And Documentation
As your mortgage planning professional, I will walk through the application process with you. It’s a simple question-and-answer interview to complete the application. We can usually pull most of the information from your credit report and just have you validate it. The amount of information you’ll actually need to provide on your own isn’t overwhelming.
The documentation you’ll be required to produce can vary, depending on the type of loan program you need, your credit, and the size of your requested loan in relation to your income and the home’s value. If you’re an excellent credit risk and your loan request is relatively small, your application for certain products may breeze through with very little documentation required.
What Happens Next
Once pre-qualified, one of my team members will send you a commitment letter detailing the conditions of your loan approval and documenting any requirements you’ll need to meet prior to closing. At the same time, the team members will order an appraisal, if one is required. At this point, you’ll have the option to lock in your interest rate or float it. Discussing these options is very important.
Floating The Rate:
You’ve applied for your loan but you’ve also decided to wait before committing to an interest rate, perhaps because you think interest rates stand a chance of going down in the short-term. Your loan can stay in a float status up until five days before closing, in most cases.
You and your lender commit to a range of interest rates for a specified period of time, up to 360 days for new construction loans. During that period, your interest rate range has the ability to be protected. If you close on the loan during that period, you get the rate. If you go beyond the lock-in period without closing, your loan will revert to a “float” status and be priced again based on current market rates. The rate range you get may be lower, higher, or equal to your lock-in rate range.
There are also some reasons why a rate could change even during a lock-in period. For instance, a change in your credit profile could occur, you might decide to change your down payment, or you might change your mind on how many discount points you want to pay.
Whether you decide to float or lock, you’ll be taking a calculated risk. It’s a tough decision, and you’re the only one who can make it. Talk with me to get an idea of what interest rates have been doing recently. You should also find out if there are any economic events coming up that could affect mortgage rates in the short term.
However, ultimately the decision is yours.Previous posts in this series:
- Hunting For Your New Home – Part 1
- Choosing The Right Real Estate Agent – Part 2
- Getting The Right House – Buying A Home – Part 3
- Home Financing Options – Part 4 of Buying Your Home
For assistance with your mortgage needs, please call Tony Gallegos.