First home...yikes

[yAyA]

Hello all,

I'm trying to buy my first home and this whole loan process is scaring me. I have a pre-approved letter but the terms of the loan have not been set. She sent me a long application and told me to just sign all the parts tha say "borrower" and then fax it back to her so she can start the process. Is that normal? I feel uncomfortable about just signing and then agreeing on loan terms. Is this normal?

This is just all overwhelming

 

[Patrick]

Yes, you have to sign all that stuff to get the loan started, but read it first so you know what you are signing. You're probably not really committed to the loan until you sign at the closing - then you're on the hook (and I believe you still have a 3-day right-of-recission clause, unless you sign it away at the closing).

 

[Rich_by_the_Bay]

I'm trying to buy my first home and this whole loan process is scaring me. I have a pre-approved letter but the terms of the loan have not been set. She sent me a long application and told me to just sign all the parts tha say "borrower" and then fax it back to her so she can start the process. Is that normal? I feel uncomfortable about just signing and then agreeing on loan terms. Is this normal?

Wait -- she is asking you to sign before all the specific numbers are filled in? Or is it all filled in and just confusing to you.

FWIW, I would sign nothing that contained important blank fields, and I would sign nothing that I didn't understand, at least at a basic level. Any good lender should understand that. If she doesn't, go shopping.

 

[brewer12345]

yaya, how is this person getting compensated? There is lots of sleaze in the mortgage industry. I would compare what they are offering you and how straight they are being with the up-front pricing offered by Etrade Bank and E-Loan. I have done a refi with the former and they were true to their word, even eating some fees when the process took too long.

 

[sgeeeee]

Whenever I purchased or refinanced, I asked that I recieve a copy of all paperwork 24 hours prior to having to sign everything at the title company. DW and I then spent an evening reading through everything and hilighting anything either of us had questions about.

The last time we bought, we showed up at the title company and as they handed us a document we would pull out our copies and start going through the hilighted questions. The lady at the title company seemed surprised and confused by this. After a couple of questions, our Real Estate Broker told her, "These two are engineers and they like to understand everything." That seemed to satisfy the title company representative and I found the comment entertaining too.

In reality, you can't really protect yourself much. The real estate industry controls the legislatures -- especially for many smaller states. The laws favor them and the contracts and documents are so riddled with loop holes in their favor that you can only hope you don't end up dealing with swindlers. The good news is that communities can't function is real estate swindlers are the norm. When one of the real estate developers turns to the dark side, the real estate community is forced to purge them for their sake. So the odds are you are dealing with a reputable group and the best thing you can do is try to understand the expenses and terms.

 

[youbet]

In reality, you can't really protect yourself much.

Disagree. We always:

Pay cash and keep the "money changers" out of our lives.

Have a competent lawyer handle housing transactions.

Admittedly, we've only been involved in a small handful of real estate transactions, but by following the above principals, we've been able to relax and worry more about what color we'll have the kitchen painted instead of whether we're being shafted by some loan company or real estate agent.

 

[sgeeeee]

Disagree. We always:

Pay cash and keep the "money changers" out of our lives.

Have a competent lawyer handle housing transactions.

Admittedly, we've only been involved in a small handful of real estate transactions, but by following the above principals, we've been able to relax and worry more about what color we'll have the kitchen painted instead of whether we're being shafted by some loan company or real estate agent.

We've never had a problem either, and I've never spent money on a lawyer for a housing transaction. Has your "competent lawyer" ever done anything but take your money and tell you to sign? How much of your money did the "competent lawyer" take? How did you determine that the lawyer was competent? How much time and energy does the average person have to expend to make sure they find a competent lawyer? Is it more or less than the time and energy required to read the paperwork themselves?

Low interest loans are an investment tool that smart investors can use to their advantage. Loan paperwork is involved and intimidating, but millions of homeowners negotiate it without harm every year. Most end up profiting from their decision to take on a mortgage and own a house.

 

[Mr._johngalt]

We've never had a problem either, and I've never spent money on a lawyer for a housing transaction. Has your "competent lawyer" ever done anything but take your money and tell you to sign? How much of your money did the "competent lawyer" take? How did you determine that the lawyer was competent? How much time and energy does the average person have to expend to make sure they find a competent lawyer? Is it more or less than the time and energy required to read the paperwork themselves?

Low interest loans are an investment tool that smart investors can use to their advantage. Loan paperwork is involved and intimidating, but millions of homeowners negotiate it without harm every year. Most end up profiting from their decision to take on a mortgage and own a house.

I counted them. 35 real estate "transactions" so far. I can recall using an
attorney for 1 or maybe 2, so I have saved a huge pile of money
myself. Not everyone can (should?) do it though IMHO.

JG

 

[excellent]

The funny thing about these forums is that everyone has such a different viewpoint on almost everything it really forces you to look at situations from all angles, which is imo the best way to go about making decisions. Well, I hope the terms of the loan don't give you any headaches in the future, and that your new house turns into a great home!

 

[lets-retire]

My wife has spent many years working in mortgages. I don't even look at any of the documents. We position ourselves so she receives the paperwork first. If she signs I sign. We just started having the HUD sent to us the day prior to closing so we could review it. If there are any important issues they should show on that document, and since the wife has worked with them for so long it's like coloring in a book to her.

With that said if you application is not filled out it's not that big of a deal it is much easier to walk from a mortgage company than from a real estate deal. I've never seen one, but that doesn't mean they don't exist. Never sign anything that takes away your ability to walk from the mortgage company without having to pay anything to them.

 

[Martha]

The OP said he was faxed a loan application and asked to sign. I agree with Rich--is he being asked to sign a form with "blanks" not completed? If he doesn't have to fill in the blanks because of the pre-approval, then at least have a cover letter go along with the signed form says something like "I signed the application form without filling in the blanks as you requested." And keep a copy of the cover letter and application form.

The lender likely does need to have a signed application to start the process.

 

[heyyou]

Martha got it right. Lender needs a signed application for the loan. At closing of escrow, the money is borrowed. Big difference between applying for a loan and the actual borrowing of the money.

 

[youbet]

I counted them. 35 real estate "transactions" so far. I can recall using an
attorney for 1 or maybe 2, so I have saved a huge pile of money
myself. Not everyone can (should?) do it though IMHO.

JG

JG, if I was going to be as active in real estate as you (35 transactions - wow!) I'd get myself educated on the subject and do it myself too. But for the five transactions (3 buys, 2 sells) we've had, the lawyer was an affordable shortcut, especially for the out of town property. Very inexpensive and the folks we used were very thorough. For example, I was in Asia for the closing of one property sale and that was no issue.

It really sounds like you've got the real estate game under control!

 

[Craig]

Most folks use attorneys more as a function of state law, rather than prudence.

In AZ, we did many real estate transactions, and never saw anyone use an attorney for residential real estate ... the title companies handle the doc's very competently.

yAyA, what state are you in?

We don't like signing blank apps ... the app is supposed to be your statement of facts to support your request for a loan. When we've been confronted by that, we just cross through the blank spots, to make it clear what we answered, and what we were leaving blank.

yAyA, just remember that the loan process is simply shopping for cheap money, from a reputable lender. Educate yourself on different programs. But remember it is all green ... if you pay more in interest / fees / points to a lender, have a good reason. You can save a ton by shopping around. And, it isn't just the interest rate ... it is also all the other fees, and other terms of the loan. Review and analyze the deal(s) as a package.

Best of luck. You'll do fine. (everyone here had their "first" one, and we got through it too)

 

[scubamonkey]

Yes, you have to sign all that stuff to get the loan started, but read it first so you know what you are signing. You're probably not really committed to the loan until you sign at the closing - then you're on the hook (and I believe you still have a 3-day right-of-recission clause, unless you sign it away at the closing).

Right of recission only applies if you are refinancing a home you already own. If you are buying and money changes hands at the closing - it is a done deal.

Seek a reputable lender with standard loan product (be careful of the exotic products) - most salaried individuals should choose a fixed rate for at least as long as they intend to make payments on the loan.

If you don't know how to read a survey, title insurance commitment, closing statement, mortgage, and note - then learn or hire an attorney. These are the basic documents. After you review the title commitment, then discuss with the closing agent what will be removed from the final title policy. Make sure your note matches the interest rate and fixed period as you agreed to with the loan officer. Make sure the mortgage only includes the legal description of the home you are buying. Make sure the closing statment fees that you are paying match the sales contract you and the seller signed.

It will take hours to read all the documents at closing, get a copy ahead of time if you want to read everything. If you get the above details taken care of prior to closing, then usually all you need to do is let the closing agent slide papers and you sign.

Good luck!!

 

[excellent]

Right now fixed rate is the only way to go right... I don't really forsee rates doing anything but increasing in the coming time.

 

[jazz4cash]

I think what's "normal" is to shop around for rates, once you have a satisfactory rate "quote", make your application. The "quote" is usually good for some period of time allowing for approval of the application. At some point, it may be necessary to lock in the rate which could involve more fees, but be very wary of any changes during processing of the application. It seems like several of the replies pertain to "closing the purchase", but I don't think you are at that point yet. Are you using a well known primary lender, mortgage broker, or someone less well known?

Pre-approvals are not worth much, generally, but even those usually have some terms of the loan such as interest rate, term and principal amount.

 

[Nords]

Right now fixed rate is the only way to go right... I don't really forsee rates doing anything but increasing in the coming time.

For those of you who've been reading this board for a while-- how long have we been hearing that?

 

[Patrick]

For those of you who've been reading this board for a while-- how long have we been hearing that?

I saw an analyst on TV this morning who was saying that rates will decrease by 1% over the next year.

 

[excellent]

Lol nords, I don't own a home but I was just saying that with the current state of the market that that was my personal opinion. I haven't been on the board a while, as you've pointed out...
Lol Patrick, the analyst must believe that the companies will be willing to pay US interest to buy mortgages pretty soon...

 

[Patrick]

Lol Patrick, the analyst must believe that the companies will be willing to pay US interest to buy mortgages pretty soon...

Not at all. She's saying that the Fed will reduce rates from their current levels by 1%. They will still be much higher than their alltime lows.