What happens at closing?

At loan closing the ownership in your newly purchased house is legally transferred to you.  The different parties that will typically be in attendance at the closing:  Mortgage Broker, Home Seller, Listing Agent, Selling Agent, Title Closing Agent.  Closing can take as little time as an hour to sign all the forms and transfer ownership or it can take several hours, depending on the contingency clauses in the purchase offer (and any escrow accounts that may need to be set up). You do not want to be rushed when closing on your new home.

Before you close on the house, you should walk-through, to make sure any repairs you requested have been made and that items which were to remain with the house (drapes, light fixtures) are still there. This is when you must call attention to any problems or issues you see with the home that should not be present

You’ll need to bring cashiers’ checks for any costs you must pay, if you need to bring more than $10,000 then it must be wired to the title company (Indiana Specific Law).  The title company will make all disbursements to the various parties involved in the purchase of your new home. The real estate agent or another representative of the title company will deliver the check to the seller and the house keys to you.

Closing Costs and Property Taxes

Statutory costs are expenses you would have to pay to state and local agencies even if you paid cash for the house and did not need to take out a mortgage. They vary by state and county. They include the following:

Recording fee for mortgage

Pay for the county clerk to record the warranty deed, mortgage, note and change the property tax billing so that it is updated. This is done for home purchase and refinance transactions

Pro-rated taxes

County taxes are paid in arrears in Indiana so you will receive a credit from the seller at closing the taxes up until the day of closing.  In the case of state taxes, if taxes are due in October and you close in August, you would owe taxes for 2 months while the seller would owe taxes for the other 10 months. Prorated taxes usually are paid based on the number of days (not months) of home ownership that has transpired.

Impound Account

Escrow or impound accounts are created to insure that insurance and tax bills are collected. Whether impound accounts are required or not is based on the requirements of the loan. Not all loans require them, but a rate change may take place if they are not taken. If your do not set up an escrow account, you may want to set up a special account on your own to make sure you have money set aside when “lump-sum” tax and insurance bills arrive.

Third-Party Closing Costs

Third-party closing costs are expenses paid to others such as appraisers, title insurance company, home inspector. These expenses are required even if you pay cash for the house. Examples of third-party costs are as follows:

Attorney fees:

Attorney requirements vary by state. Most states do not require attorneys. Attorneys usually charge a percentage of the selling price (three-fourths or 1 percent), but some may work for a flat fee or on an hourly basis. If attorneys are required in your state, your realtor should have information that will help you answer your questions.

Title search costs:

The title company or your attorney will arrange for the title search to make sure there are no obstacles or encumbrances (liens, lawsuits) on the property. This is how the owner of the property is verified. Nothing could be worse than buying a home from somebody that didn’t actually own it!

Home owner’s insurance:

Most lenders require that you prepay the first year’s premium for home owner’s insurance (sometimes called hazard insurance) when you purchase a home. This helps to insure that their investment will be secured, even if the house is destroyed. For purchases you can typically pay the first year premium at closing.  In addition to the first year premium there will be an additional two months escrowed as a cushion in case of future increases.

Real estate agent’s sales commission:

The seller pays the commission to the real estate agent. If one agent lists the property and another sells it, the commission usually is split between the two. The commission is negotiable between the seller and the agent, as a buyer this is not something you need to worry about.

Finance and Lender Charges

Most people associate closing costs with the finance charges levied by mortgage lenders. The charges you pay will vary among lenders, you may have to pay the following charges depending on your lender.

Origination or application fees:

These are fees for processing the mortgage application and may be a flat fee or a percentage of the mortgage. Lakewood Lending Group does not charge application fees. You will pay points only if you are buying down your rate.

Inspections (termite, water tests):

In most purchase scenarios, a termite inspection is required. In many rural areas, lenders will require a water test to make sure the well and water system will maintain an adequate supply of water to the house (this is usually a test for quantity, not a test for water quality).

Points:

A point is equal to 1% of the loan amount borrowed. Points can help you buy the rate down and get a lower rate. Points are typically tax deductible, but different deductibility rules apply to second homes. Your tax advisor can clarify these points for you.

Document preparation fees:

You will see an amazing array of papers, ranging from the application to the acceptance to the closing documents. This fee covers the cost of drawing docs.

Property Survey:

Some lenders will require that the property be surveyed to make sure that no one has encroached on it and to verify the buildings and improvements to the property. This is only used under special circumstances as an appraisal is usually enough for most lenders.

Appraisals:

This is how the value of the home is verified. Recent comparable sales from local homes are used to gauge your home’s value.

Credit report:

A credit report is required on all purchase and refinance transactions. This is how the lender gauges your creditworthiness.

Private Mortgage Insurance:

If your down payment is less than 20%, many lenders will require that you purchase private mortgage insurance (PMI) for the amount of the loan. This way, if you default on the loan, the lender will recover lost monies. These insurance premiums will continue until your principal payments plus down payment equal 20% of the selling price, but they may continue for the life of the loan. Lakewood Lending Group has many solutions that do not require private mortgage insurance, with the best being a USDA Home Loan!

Release fees:

If the seller has worked with a contractor who has put a lien on the house and who expects to be paid from the proceeds of the sale of the house, there may be some fees to release the lien. Although the seller usually pays these fees, they could be negotiated in the purchase offer.

Escrow account:

An escrow account or impound account is a fund into which you will make monthly payments for taxes, homeowner’s insurance, and PMI (mortgage insurance, if required). The money to fund the escrow account is collected on a monthly basis and will pay your insurance and tax bills when they come due, May and November for Property Taxes, month of your purchase for homeowners insurance. The goal is to have these money put aside in small amounts every month versus having a large lump sum bill come due.

Prepaid interest:

Your first regular mortgage payment is usually due about 6 to 8 weeks after you close (for example, if you close in March, your first regular payment will be in May; the May payment covers the cost of borrowing money for the month of April). Interest costs, however, start as soon as you close. The lender will calculate how much interest you owe for the fraction of the month in which you close (for example, if you close on March 25, you would owe interest for 6 days). The odd days interest is is due at closing. In a refinance transaction you will owe money to your old lender. In the previous example you would owe 25 days to your old lender. In a refinance you are typically paying about one month’s worth of interest in the transaction every time you refinance. This is offset by the first month gap in which you will NOT make a mortgage payment immediately after refinancing.

Related posts from Indiana's USDA Home Loan Expert:

1. The Benefits of a USDA Guaranteed Loan to Purchase
2. How Much Can I Afford
3. The Tax Man Cometh: As A Homeowner You Can Give A Lot Less

In Today’s Market it is more important than ever to ensure that your home is in tip-top condition.  What that typically means is making some improvements or remodeling.

The website RemodelorMove.com has some excellent calculators if you are trying to decide if it is better to remodel your present house or move.  Since prices on existing homes are so low right now the bias lends itself towards moving; however, to ensure you get top dollar for your home you might need to make some improvements to your present house before you are able to sell.

I found this great information about returns on remodeling projects today:

1. Master Suite - Turning your master bedroom into a master suite is a popular remodel and one of the best ways to add value to your home. Bedrooms aren’t just for sleeping anymore. A master suite can include sitting areas, direct access to walk-in closets, and of course, the master bath. Master suites can increase your home value as much as $67,000 and recoup as much as 65% of their costs on average.
2. Family Room Addition - Family rooms are a desirable addition to modern homes. They can increase the value of your home as much as $50,000 on average and recoup approximately 65% of their costs.
3. Basement Remodel – People who have basements are tapping into that storage area and turning it into living space including bedrooms, family rooms, play rooms, and even bathrooms. A basement remodel can add as much as $46,000 to the value of your home on average for a mid-range remodel and recoup 75% of its cost.
4. Kitchen – Technology changes so quickly that anything more than a few years old looks dated. Since your kitchen is likely the one room in your house to contain the most gadgets, remodeling this room can add significant value and utility to your house. Kitchen remodels can recoup as much as 72% of their costs.
5. Attic – A great way to turn this wasted space into livable space is by adding a small bedroom or converting this space into usable storage. Attics can add over $40,000 worth of value to a home and recoup over 80% of their cost.
6. Sun Room – A popular trend today is having a room that doubles as an indoor-outdoor area, also known as a sun room. Some sun rooms have entire walls that can be rolled up, opening the room to the outside completely, while others are more simple additions, acting like screened in porches or decks. A sun room will recoup approximately 50% of its cost.
7. Garage – Families with multiple automobiles require two or more garages. Some people with boats and RV’s also like to keep their vehicles safe indoors. As such, adding a garage for these purposes will add value to your home. A two car garage can add as much as $36,000 to the value of your home and recoup 62% of its cost.
8. Bathroom – most agents will tell you the master bathroom is the third most important room to potential buyers, behind only the kitchen and master bedroom.  Turning your bathroom into a master bath suite with jetted tub, standing shower and dual sinks can increase the value of your home.  Also, adding an additional bathroom to a home that has only one can also add resale value.  A bathroom addition will add over $20,000 of value to your home and recoup 60% of its cost.
9. Home Office – With scores of people telecommuting or opting to work from home rather than at the corporate location, a home office is quickly becoming one of America’s favorite additions. This addition will recoup almost 50% of its cost and increase the value of your home nearly $13,000.
10. Roof Replacement - Many potential buyers will cross your home off their list if they think roof repairs will need to be made in the near future. At the same time, replacing your roof can add value to your home and make it more energy efficient. A new roof will increase the value of your home nearly $13,000 and recoup almost 67% of its cost.

lendingtree.com, Lendingtree.com, Mar 2010

Remember if you are looking to purchase a USDA Home Loan is the best loan available.  If you are looking to get approved to purchase your next house, or get cash for your remodeling project the best place to start is Lakewood Lending Group.

Related posts from Indiana's USDA Home Loan Expert:

1. Minimum Property Requirements for a USDA Home Loan
2. Using a USDA Loan to Purchase a Home After a Foreclosure
3. What Goes On At Loan Closing

How much can you afford?

Deciding how much house you can afford is a personal decision.  Many factors come into play.  How much can I borrow?  How much can I put toward my down payment?  What size monthly payment can I afford?

There are no black and white answers to these questions.  Its a matter of give and take.  If you plan on a 30 year mortgage, you can probably make a lower down payment (or perhaps no down payment at all [as long as your using a USDA Loan]) and still manage the monthly payments.  If, on the other hand, you plan on a 15 year mortgage, you’ll probably want to make a larger down payment to keep your monthly payments in line with what you can afford.

How large a down payment can I make?

Many buyers look at their cash on hand as their only source for their down payment.  This simply is not the case.  One way to fund or partially fund a down payment is by using a gift.   Parents, grandparents and other family members are often eager to help by making a cash gift toward the purchase of your home.

If you are selling a home, the equity you’ve built up can be applied to your down payment.

Of course a USDA Home Loan still offers 100% financing, and if the home appraises for enough you can include all closing costs, or possibly get the closing costs covered from a seller closing cost concession.

What size monthly payment can I afford?

When determining what size monthly payment you can afford, you’ll want to consider what other monthly expenses you have.   Tangible expenses such as car payments, day care and utility bills, all play a role in how large a monthly payment you can afford.

There are also the intangible expenses or lifestyle expenses that you’ll want to consider.  Things such as dining out, travel and when you buy your next car can effect how much you can afford.  Are you willing to curtail or delay some of these expenses in order to afford a larger monthly payment?

This is a very important fact: what payment are you comfortable with, not what payment you can get qualified that may be much larger than what you are comfortable making.

How much can I borrow?

This is a question you’ll want to get answered before you begin your home search.   This is something that I’m here to help you with.  My mortgage calculators will help you see how your down payment, monthly payment and the amount you borrow are all interrelated.

I can answer any questions you may have about the mortgage process.  But the best I can help is by getting you pre-qualified for a mortgage loan.  To get started, simply complete the Quick Rate Request.  I look forward to helping you buy your dream home.

Related posts from Indiana's USDA Home Loan Expert:

1. What Goes On At Loan Closing
2. The Benefits of a USDA Guaranteed Loan to Purchase
3. Using a USDA Loan to Purchase a Home After a Foreclosure

I’m here to help you accomplish your dreams of homeownership. Productivity guru Jason Womack shares his recommendation for building up “Team You.”

Now more than ever you need a competent professional.  Let’s talk so we can discuss your mortgage needs.

Related posts from Indiana's USDA Home Loan Expert:

1. How Much Can I Afford
2. What Goes On At Loan Closing
3. Using a USDA Loan to Purchase a Home After a Foreclosure

Deductible Homeowners Expenses

One of the advantages of owning your own home is that the home mortgage interest and real estate taxes paid can be deducted from your federal income tax*. To do so, youll need to comply with current tax laws and complete the appropriate federal tax forms and itemized deduction schedules.

Home Mortgage Interest

For your home mortgage interest to be deductible, it must be for a first or second mortgage, a home improvement loan or a home equity loan. Additionally:

• The mortgage loan must be secured by your main home or a second home
• Only interest paid for that tax year can be deducted

The amount you can deduct can be limited if your mortgage balance is more than $1 million ($500,000 if married filing separately) or the mortgage was taken out for reasons other than to buy, build or improve your home.

Points

Points (aka loan origination fees, maximum loan charges, loan discount, or discount points) are generally treated as pre-paid interest and, as such, the full amount cannot be deducted in the year paid.  Rather, the deduction must be taken over the term of the loan.  When you refinance, you may write off the remained of the points in the year of the refinance.

Real Estate Taxes

State or local real estate taxes can be deducted from your income if they are paid in the tax year. To qualify, the tax must be levied on the propertys assessed value, the taxing authority must charge a uniform rate for properties in its jurisdiction, and the tax must not be for your special privilege but for the benefit of the general welfare.

Restrictions on Itemized Deductions

The amount of itemized deductions you can take are restricted by your adjustable gross income. In 2009, the limits were $166,800 for single persons, persons filing as head of household or qualified widow(er), or married persons filing jointly; and $83,400 for married persons filing a separate return.

Non-deductible items

Many of the expenses related to owning your own home cannot be deducted from your income tax. These non-deductible items can include:

• Most settlement costs, including (but not limited to) appraisal fees, notary fees, VA funding fees, USDA Guarantee Fee, and mortgage preparation costs
• Insurance
• Local assessments that generally add value to your home, such as sidewalks, sewers, etc.
• Utilities
• Domestic help
• Depreciation

Check with the IRS

*The information contained in this article is for informational purposes only and may not reflect current tax year rules and regulations. Youll need to consult with your tax attorney, CPA, or the IRS for current tax year rules, restrictions and regulations.

Related posts from Indiana's USDA Home Loan Expert:

1. What Goes On At Loan Closing
2. Using a USDA Loan to Purchase a Home After a Foreclosure
3. Home Buying Process for a First Time Homebuyer

Any home that will utilize a USDA Home Loan must meet minimum property requirements (MPR), these are the same requirements utilized by FHA.  The MPR is referred to as the 3s’s, Safety, Security, and Soundness.  The requirements differentiate between minor and major.  A minor item is not something that would keep the house from meeting the requirements.  Some examples of minor items:  a hole in a window screen, cracked glass, worn floors, or a minor plumbing leak.  Some major items:  foundation damage, worn out roof (3 or more layers of shingles), faulty mechanical system.

When you are looking at a homes keep these items in mind, so you’ll know if the property will meet USDA minimum property requirements.

This list is for reference only and does not guarantee compliance with FHA Minimum Property Requirements.  Minimum Property Requirements are to insure the health and safety of the occupants and/or the marketability of the property.

The basic requirement is that the property be free of all known hazards and adverse conditions that:

• may affect the health and safety of the occupants
• may affect the structural soundness of the house
• may impair the use and enjoyment of the house

FHA Existing Property Condition Screening Checklist

Site Hazards And Nuisances
Presence of the following may indicate unacceptable property condition:

• Sinkholes
• Active or planned gas-drilling within 300 feet
• Within 75 feet of operating oil/gas well with no visible mitigation measures
• Abandoned oil or gas well within 10 feet
• Slush pits
• Excessive noise or hazard from heavy traffic area
• Dwelling or improvements within 10 feet of easement for high-pressure gas or petroleum line
• Dwelling or improvements within fall distance for overhead towers (high-voltage, radio/TV, cell phone etc)
• Excessive smoke, fumes, offensive noises, or odors
• Stationary storage tanks with more than 1000 gallons of flammable or explosive material

Wood Destroying Insects
Presence of the following will require a termite inspection and treatment if infestation is present:

• Structure is ground level and wood is touching ground
• House or other structure show obvious evidence of infestation
• Local jurisdiction requires inspection
• Inspection is customary to the area

Soil Contamination
Presence of the following may indicate unacceptable property condition:

• Surface evidence of underground storage tank
• Proximity to dumps, landfills, industrial sites that could contain hazardous materials
• Presence of pools of liquid, pits, ponds, lagoons, stained soils or pavement

Grading And Drainage
Presence of the following may indicate unacceptable property condition:

• Grading does not provide drainage away from structure
• Standing water near structure

Individual Water And Sewage Systems
Presence of the following may indicate unacceptable property condition:

• Private sewage system shows evidence of system failure
• Property lacks connection to public water (you’ll need to get a water test to ensure water quality meets public health requirements)
• Separation between well and septic drain field less than 100 ft (75 feet may be acceptable if local authorities allow.)
• Separation between well and property line is less than 10 feet (If local authority requires greater distance that requirement must be met.)

Private Road Access
Presence of the following may indicate unacceptable property condition:

• Property inaccessible by foot or vehicle
• Property accessible only by private road without permanent recorded easement

Floor Support Systems
Presence of the following may indicate unacceptable property condition:

• Significant cracks
• Evidence of water damage
• Evidence of spongy/weak/rotted flooring

Framing/Walls/Ceiling
Presence of the following may indicate unacceptable property condition:

• Significant cracks
• Visible holes in exposed areas that could affect structure
• Damaged plaster, sheetrock, or ceiling materials in homes constructed before 1978
• Significant water damage

Attic
Presence of the following may indicate unacceptable property condition:

• Inadequate access
• Evidence of holes
• Support structure damaged
• Significant water damage visible from interior
• No ventilation by vent fan or window

Basement
Presence of the following may indicate unacceptable property condition:

• Blocked or inadequate access
• Evidence of significant water damage
• Significant cracks or erosion in exposed areas that affect structural soundness

Crawl Space
Presence of the following may indicate unacceptable property condition:

• Blocked or inadequate access
• Space inadequate for maintenance (recommended 18 inches)
• Support beams not intact
• Excessive dampness or ponding of water

Slab
Presence of the following may indicate unacceptable property condition:

• Significant cracks that could affect structural soundness

Roof
Presence of the following will require a roof inspection and possible repair:

• Missing tiles, shingles, flashing etc
• Holes
• Signs of leakage

Furnace/Heating System
Presence of the following may indicate unacceptable property condition:

• Unit does not turn on
• Heat is not emitted
• Unusual noise
• Smoke or irregular smell
• Significant holes or deterioration in unit

Central Air Conditioning
Presence of the following may indicate unacceptable property condition:

• Unit does not turn on
• Cool air is not emitted
• Unusual noise
• Smoke or irregular smell
• Significant holes or deterioration in unit

Electrical System
Presence of the following may indicate unacceptable property condition:

• Electrical switches don’t work
• Outlets don’t work
• Presence of smoke or sparks from outlet
• Exposed frayed or unconnected wiring

Plumbing System
Presence of the following may indicate unacceptable property condition:

• Significant drop or limitation in water pressure
• No hot water
• Toilets don’t function or have been removed
• Toilet leaks
• Sinks/bathtub/shower leaks (very minor leaks may be acceptable)
• Sinks/bathtub/shower does not work or have been removed
• Swimming pools not operational, in bad repair or not maintained

Paint
Presence of the following may indicate unacceptable property condition:

• Chipped peeled or peeling paint on interior or exterior of home and/or structures and improvements if home built before 1978
• Chipped or peeling paint on exterior surfaces if finish is unprotected (ie, bare woods) if home built after 1978

Other
Presence of the following may indicate unacceptable property condition:

• Missing or inoperable exterior doors
• Broken or missing stairs
• Absence of built-in appliances
• Absence of free-standing stove

Related posts from Indiana's USDA Home Loan Expert:

1. Using a USDA Loan to Purchase a Home After a Foreclosure
2. REO Properties and USDA Loans
3. What Goes On At Loan Closing

Flickr photo by Nick Bastina

Did you know you can use the power of a USDA Home loan to purchase a Real Estate Owned (REO) property.  Yes, all the deals you’ve been hearing about on homes and a bank presently owns.  Sometimes a foreclosure will need a little work, but recently foreclosures have been coming on the market needing less, and less work.  With a USDA home loan you can purchase a home at under market value, and with 100% financing, and if the house appraises for enough you can even roll in the closing costs.  A lot of lenders are so eager to move these homes that they will offer a closing costs concession, a percentage of the purchase price to use towards your closing costs.

You can use USDA Home Loan financing to purchase a foreclosed, bank owned (REO) as long as the house will be the house you intend on living in (primary residence).

With any home, but especially REO’s you must ensure that the property meets FHA minimum property requirements (MPR). The 3 S:
1.  Safety
2.  Security
3. Soundness

Related posts from Indiana's USDA Home Loan Expert:

1. Using a USDA Loan to Purchase a Home After a Foreclosure
2. Minimum Property Requirements for a USDA Home Loan
3. The Benefits of a USDA Guaranteed Loan to Purchase

A lot of homeowners think that after a foreclosure they will never be able to purchase a home again.  A foreclosure does hurt your credit in the short term, but it will not keep you from purchasing a home in the future.

The actual foreclosure event will stay on your credit report for seven (7) years.

So, your house was foreclosed on you’ve moved out now what.

You’ll need to start re-building your credit.  One thing you’ll need to make sure is keep track of all paper work from the previous mortgage company.  Be sure and get a free copy of your credit report from annualcreditreport.com  Check your credit report for errors, if there are errors send supporting documentation to the 3 credit bureaus asking that the error be corrected.  By law they have 30 days to investigate or they have to remove the item; however, if it is later found that it is accurate, it will be replaced on your credit.  The Federal Reserve Board has a flyer to help you entitled, “5 Tips for Improving Your Credit Score.”

Document the circumstances surrounding your foreclosure.  What happened that caused the foreclosure to start, loss of job, medical problems, death of spouse, significant other, etc.  The underwriter will want to know that the problem is not likely to recur and that you are in a much better ability to pay a mortgage in the future.

You will need 3 years from the date of your foreclosure until you are able to purchase a house using a usda loan, which allow for 100% mortgage financing.  In addition to the 3 year time frame you will also in most cases need at least a 620 credit score.

One thing that will help speed the process if you work with your lender prior to the foreclosure through:

• Forbearance. This is an agreement that lets borrowers make a reduced payment, or none, for a specific period. You might have to make larger payments once the crisis has passed. To qualify, you might need to show that you’re expecting a bonus, a tax refund or other income that will let you catch up.
• Reinstatement. You agree to pay the full amount of your missed payments by a specific date. Reinstatement is sometimes combined with forbearance.
• Modification. Your lender agrees to change the terms of the loan to make payments more affordable. Your lender may agree to add missed payments to your loan balance or extend the term of your loan, reducing the size of your payments.

If you are beyond that point or there is just no way you can afford the current mortgage then it is time to move on:

• Work with your lender and ask if they will accept a deed in lieu of foreclosure.  This is where you sign the house over to the lender then they do not have to go through the foreclosure process.  You will have to move out immediately.  The bright spot for you is that you can begin the rebuilding of your credit sooner than if you waited on a foreclosure.
• Sell your home. More than likely you owe more than your home is worth.  So, you will need to sell as a “short sale”.  You’ll want to contact a short sell investor or a Certified Distressed Home Seller Real Estate Agent.  While you may try selling yourself, this will not get you the exposure your home needs to sell quickly.

Related posts from Indiana's USDA Home Loan Expert:

1. The Benefits of a USDA Guaranteed Loan to Purchase
2. Minimum Property Requirements for a USDA Home Loan
3. REO Properties and USDA Loans

When the time comes to buy your first home you will most likely have conflicting feelings about the home buying process. Looking for the perfect place to call home is an important and exciting time in your life. Before you can get the keys to your first home you have to go through several steps, some of which can be confusing or downright intimidating. One of the most important steps is securing money to purchase your home. The loan process can be complicated therefore learning as much as possible beforehand will reduce the chances of making a costly mistake. Here we look at the loan process for first time home buyers.

Determine how much home you can afford – This is not an official step in the loan process, but an important step nevertheless. Avoid putting yourself in a position where you are house poor by buying a home that you can afford. Lenders consider many factors when determining how much credit they are willing to extend, however no one knows your financial situation better than you- determine a number you are comfortable with and stick to it, even if the lender approves your loan for a higher amount.

Compare loan terms – Finding the right lender and loan is just as important as finding the perfect home. Buying a home is a huge investment and one that should be taken very seriously. Take the time to compare lenders and loan terms to find the best loan. Begin with a checklist of potential lenders including their name, address and contact information. For each lender you will want the following information; type of mortgage, minimum down payment, interest rates and points, prepayment penalties, closing costs and length of time to process loan.

Loan application – You can fill out a loan application in person, over the phone and sometimes on the Internet. The loan officer will ask you about your employment, income, savings and debt. The loan officer will also request proof in the form of pay stubs, W-2’s and tax returns. Your credit will be checked to determine creditworthiness. When filing out the loan application make sure all requested information is provided to ensure the application is processed without delay. Incorrect or incomplete applications could result in being turned down for a loan.

Processing the loan – Once you have completed the loan application it will then pass from the loan officer to the processor. Their job is to make sure all the paperwork is in order and all requested information and documentation is complete. The processor basically reviews all the information that you went over with the loan officer, verifying information and comparing numbers to determine whether you qualify for the loan.

Underwriting – Next your loan application will be reviewed by the underwriter. The underwriter checks the work of the processor. They will go over all the information on the loan application once again to ensure everything that is needed is present. A second look at the numbers by the underwriter will confirm whether or not your loan will be approved. If you have met all the conditions of the loan and provided all the necessary documentation your loan will be approved.

Closing and settlement – When the loan has been approved it will then go to closing. This is when the lender contacts the title company to begin the paperwork needed for settlement. At this stage funds are made available for the purchase of the home and settlement is scheduled. Settlement is the final step in the loan process. Everyone is present the buyer, seller, real estate agents and settlement attorneys. During settlement both the buyer and seller go over a settlement sheet to ensure the numbers are correct and as agreed. If all steps of the loan process have been followed, there should be no last minute issues or problems. This is the last step in the loan process.

Related posts from Indiana's USDA Home Loan Expert:

1. Using a USDA Loan to Purchase a Home After a Foreclosure
2. What Goes On At Loan Closing
3. The Benefits of a USDA Guaranteed Loan to Purchase

Time is running out on the Extended tax credit.  A house must be under contact by April 30, 100 days from tomorrow, to qualify for the tax credit. The implementation of some of the new regulations is adding to time to get mortgage approval.  As the clock clicks down you must ensure you are working with a competent mortgage professional.

Remember the Government is literally handing out money asking you to please take this money of up to $6,500 for a move-up buyer and up to $8,000 for first time homebuyers.  Remember that this credit is on top of the credit you will realize from being a homeowner of interest and taxes paid.  To top it all off present home values are still low, rates are at a historical low.  Your ability to own a home and the affordability will likely never be better than it is right now.

Are you Ready?

• Creditworthiness (What credit is acceptable, what credit is needed to qualify for various loan programs)
• Qualifying Income
• Mortgage Loan Options
• Down Payment (With a USDA Loan it will be zero)

These are just some of the questions that are answered during an initial consultation with me.

Listen as an I.R.S. agent gives tips on the homebuyer tax credit.

Related posts from Indiana's USDA Home Loan Expert:

1. What’s a Credit Score Got to Do With It?
2. Home Buying Process for a First Time Homebuyer
3. The Benefits of a USDA Guaranteed Loan to Purchase