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Understanding the Loan Process
A guide to buying property in the USA...
Organize your documentsWhether you are buying or refinancing a home, there are many important documents that will be needed to process your home loan. The process of loan will depend on what status you currently hold in the USA, if you are a Brit. To make the process go quickly and smoothly, gathering the following documents, being prepared and understanding that the procedure in the States is more security conscious, will make it easier on you.
US Citizens/Green Card Holders
You will need two years W-2 (taxes in the US are filed from the end of December to January of each year and not April to April in UK) and at least one months worth of pay stubs. If you are self-employed, two years tax returns, three months checking/savings bank statements, copies of any stock brokerage or IRA/401K accounts, and if you own rental property, please provide rental agreements and current market value.
We do have wonderful news, if you have only been here in America, a few months and are staring at a brick wall because of the FICO and trade lines issues. (FICO is how your credit score is referred to by the US market.) NOW, we have several lenders that will accept the UK credit report showing your credit lines there. (Only through certain lenders…don’t ask for a name as that gives my market away)
Non-Permanent Resident Aliens (Visa Holders)
W2 (if you have one), pay stub, copy of your visa and passport, 3 months checking/savings bank statements, if you own a house in UK a copy of the most up to date transactions and /or most recent mortgage statement, a copy of your UK credit report (obtain from www.experian.co.uk or www.creditexpert.com ) a copy of the rental agreement if you are renting your home out in UK. Employment/Assets verification and copies of the relocation package if this is applicable.
Foreign National (Holiday Home Buyer)
3 months bank statements, if you own a house in UK a copy of the most up to date transactions and/or mortgage statement, a copy of your UK credit report ( obtain from www.experian.co.uk), a copy of your passport, a copy of the purchase contract. Employment/Assets verification.
There may be some other documents required, but we will let you know.
Deposits/Down Payments
Now you have figured out which category you fall into, you need to decide how much you can afford to put down as a deposit. This can make or break your dream. Take into account, the more down payment you put down toward the loan, the better interest rate you could get.
Loan programs and rates
To find the right loan for you, you need to consider your long term goals. If you plan to sell the house in a few years you may want to consider an adjustable rate loan. On the other hand, if you plan to keep the house for a longer time, you may want to look at fixed rate loan. Compare different programs. Shopping for a loan can be difficult, so an experienced loan officer can help you make a decision that's best for you. A reputable loan officer will also not avoid talking about closing costs. (My experience has taught me that if they avoid this subject, YOU will pay a hefty bill at closing.)
Get Pre-Qualified
Pre-qualification occurs before the loan process actually begins, and is usually the first step after initial contact with the loan/mortgage broker is made. The broker gathers information about the income and debts of the borrower and makes a financial determination about how much house you may be able to afford. By getting pre-qualified or pre-approved, you don't waste time looking for properties you cannot afford. It also puts you in a stronger position when you are negotiating with the seller, because the seller knows that your loan is already preapproved and being handled by a mortgage broker. This step also helps you close quickly, since your loan application is already approved. Don’t hide anything from the broker, any nasty shocks could and have wrecked a deal. The mortgage officer will be able to deal with most problems and position the loan perfectly.
Apply for the Loan
The buyer, now referred to as a "borrower", completes a mortgage application with the loan officer and supplies all of the required documentation for processing. Various fees and down payments are discussed at this time and the borrower will receive a Good Faith Estimate (GFE) and a Truth-In-Lending statement (TIL) within three days of the application being agreed, itemizing the rates and associated costs for obtaining the loan. The specific loan program and rates will be determined at this time.
What is a good faith estimate?
Your lender is required by the Federal Real Estate Procedures Act to provide you with a good faith estimate of the fess due at closing within 3 days of the “physical” loan application being applied for. These mortgage fees, sometimes referred to settlement fess, cover every expense associated with your home loan, inspections, title insurance, taxes and other charges. Closing costs typically amount to between 3 and 5 percent of the sale price, its best to wait until you receive the good faith estimate before signing any loan. Remember….the GFE is called an estimate for a reason, if the loan officer cannot give you exact figures they should advise you prior to the GFE being given to you.
| Different states have slightly varying guidelines on the mortgage process one of the main areas being taxes. Check with the mortgage broker for information. |
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U.S.A... 
