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Buyer Guide

Buying property involves a seemingly endless number of details. This guide is designed to make the process easier to navigate and understand.
7. THE LOAN PROCESS

 

Important: During the loan process, do not make any big purchases or use credit cards excessively, open or close banking or credit accounts, or change jobs. This will negatively impact your credit, and could cause your loan to be denied.

 

Pre-approval, Choosing a Loan Product & Applying for your loan

Presumably you have already obtained a pre-approval letter, chosen a lender and chosen a loan product. But whether or not you have, once the sellers sign the contract, you will apply for the loan, which officially begins the loan process. Para 5.2 of the P&S sets the deadline by which you promise to do this—typically 5-7 days.

 

The Essentials

In order to get your loan approved, four things need to happen. Your mortgage advisor or broker will guide you through all the steps in this process, as they…

  1. Verify your income and expenses (using tax returns, W2s, pay-stubs, etc.).
  2. Verify the source of funds you will use for down payment & closing costs.
  3. Run a credit report to be sure you meet the requirements of the loan you are applying for.
  4. Order an appraisal to make sure the mortgage is in line with the value of the property. (If the property does not appraise, you can cancel, or try to renegotiate the price.)

If the bank isn’t satisfied with any of the above, and declines to give you the loan, you will cancel the P&S agreement by the contingency date (Para 5.5 of the P&S) and get your deposit back.

 

Commitment Letter & Clear to Close

Your lender will issue a loan commitment document. This is a bit of a misnomer, because this letter often contains conditions. You will review any conditions with your attorney by the mortgage contingency date.

The clear to close letter is what you’ve been waiting for! Now that your loan has been fully approved (all conditions have been satisfied), the attorneys can schedule the closing.

 

Walkthrough

Within 24 hours of closing—most often, the morning of—you will do a walk-though. This is largely a formality to ascertain that the property has been left broom clean, with all personal property and rubbish removed. (If this is not the case, we will ask the sellers to resolve any issues.)

 

CLOSING

Massachusetts is a “Closing Table State,” meaning that the buyer’s attorney, the buyer and the seller (or their representative) actually sit together at the closing table. Closing typically occurs at the buyer’s attorney’s office. The lender and the title insurance company don’t attend the closing—they are represented by the buyer’s attorney.
 

Important: When wiring funds, use extreme caution. Hackers target email accounts of real estate brokers, agents and other parties involved in real estate transactions, including mortgage brokers, closing attorneys, and title agents. In many cases, they have been able to intercept emailed wire transfer instructions, obtain account information and, by altering some of the data, use emails to redirect the funds to a different account. These emails are convincing and sophisticated and may look like legitimate emails from parties in the transaction. Please read Wire Fraud Advisory.

 

MORTGAGE

You will spend about 30 minutes with your attorney signing mortgage documents before the seller arrives. Typically, the entire closing will take about an hour. Here is what happens:

  • You sign a tall pile of mortgage documents
  • You review the Closing Disclosure form, which outlines all the details of your loan, and adjustments for items already paid by the seller (taxes, fuel, condo or HOA dues, etc.)
  • You review plot plan (if you ordered one)
  • You buy title insurance (if you choose to)
  • Seller (or their representative) delivers smoke certificate and passing Title 5 (or Certificate of Compliance for a newly installed septic system)
  • Seller is paid, and checks are exchanged for the various adjustments
  • Seller conveys deed to you (If they’re not present at closing, they pre-sign the deed.)

 

Then—drum roll please!—you’re given the keys! Appreciate this moment fully—though it’s recommended you change the locks. Congratulations—applause and hugs all around.

After closing, your attorney brings documents to the Registry of Deeds to be stamped and recorded, and then distributes copies of the recorded documents to you and the bank.

CASH

Cash closings can take as little as 15 minutes. Here is what happens:

  • You review costs and adjustments for items already paid by the seller (taxes, fuel, condo or HOA dues, etc.)
  • You review plot plan (if you ordered one).
  • You buy title insurance (if you choose to)
  • Seller (or their representative) delivers smoke certificate and passing Title 5 (or Certificate of Compliance for a newly installed septic system)
  • Seller is paid, and checks are exchanged for the various adjustments
  • Seller conveys deed to you. (If they’re not present at closing, they pre-sign the deed.)

 

Then—drum roll please!—you’re given the keys! Appreciate this moment fully—though it’s recommended you change the locks. Congratulations—applause and hugs all around.

After closing, your attorney brings documents to the Registry of Deeds to be stamped and recorded, and then provides you with copies.


 

Guides written by Barney Stein,

LVRE agent since 2007

7. THE LOAN PROCESS

 

Important: During the loan process, do not make any big purchases or use credit cards excessively, open or close banking or credit accounts, or change jobs. This will negatively impact your credit, and could cause your loan to be denied.

 

Pre-approval, Choosing a Loan Product & Applying for your loan

Presumably you have already obtained a pre-approval letter, chosen a lender and chosen a loan product. But whether or not you have, once the sellers sign the contract, you will apply for the loan, which officially begins the loan process. Para 5.2 of the P&S sets the deadline by which you promise to do this—typically 5-7 days.

 

The Essentials

In order to get your loan approved, four things need to happen. Your mortgage advisor or broker will guide you through all the steps in this process, as they…

  1. Verify your income and expenses (using tax returns, W2s, pay-stubs, etc.).
  2. Verify the source of funds you will use for down payment & closing costs.
  3. Run a credit report to be sure you meet the requirements of the loan you are applying for.
  4. Order an appraisal to make sure the mortgage is in line with the value of the property. (If the property does not appraise, you can cancel, or try to renegotiate the price.)

If the bank isn’t satisfied with any of the above, and declines to give you the loan, you will cancel the P&S agreement by the contingency date (Para 5.5 of the P&S) and get your deposit back.

 

Commitment Letter & Clear to Close

Your lender will issue a loan commitment document. This is a bit of a misnomer, because this letter often contains conditions. You will review any conditions with your attorney by the mortgage contingency date.

The clear to close letter is what you’ve been waiting for! Now that your loan has been fully approved (all conditions have been satisfied), the attorneys can schedule the closing.

 

Walkthrough

Within 24 hours of closing—most often, the morning of—you will do a walk-though. This is largely a formality to ascertain that the property has been left broom clean, with all personal property and rubbish removed. (If this is not the case, we will ask the sellers to resolve any issues.)

 

CLOSING

Massachusetts is a “Closing Table State,” meaning that the buyer’s attorney, the buyer and the seller (or their representative) actually sit together at the closing table. Closing typically occurs at the buyer’s attorney’s office. The lender and the title insurance company don’t attend the closing—they are represented by the buyer’s attorney.
 

Important: When wiring funds, use extreme caution. Hackers target email accounts of real estate brokers, agents and other parties involved in real estate transactions, including mortgage brokers, closing attorneys, and title agents. In many cases, they have been able to intercept emailed wire transfer instructions, obtain account information and, by altering some of the data, use emails to redirect the funds to a different account. These emails are convincing and sophisticated and may look like legitimate emails from parties in the transaction. Please read Wire Fraud Advisory.

 

MORTGAGE

You will spend about 30 minutes with your attorney signing mortgage documents before the seller arrives. Typically, the entire closing will take about an hour. Here is what happens:

  • You sign a tall pile of mortgage documents
  • You review the Closing Disclosure form, which outlines all the details of your loan, and adjustments for items already paid by the seller (taxes, fuel, condo or HOA dues, etc.)
  • You review plot plan (if you ordered one)
  • You buy title insurance (if you choose to)
  • Seller (or their representative) delivers smoke certificate and passing Title 5 (or Certificate of Compliance for a newly installed septic system)
  • Seller is paid, and checks are exchanged for the various adjustments
  • Seller conveys deed to you (If they’re not present at closing, they pre-sign the deed.)

 

Then—drum roll please!—you’re given the keys! Appreciate this moment fully—though it’s recommended you change the locks. Congratulations—applause and hugs all around.

After closing, your attorney brings documents to the Registry of Deeds to be stamped and recorded, and then distributes copies of the recorded documents to you and the bank.

CASH

Cash closings can take as little as 15 minutes. Here is what happens:

  • You review costs and adjustments for items already paid by the seller (taxes, fuel, condo or HOA dues, etc.)
  • You review plot plan (if you ordered one).
  • You buy title insurance (if you choose to)
  • Seller (or their representative) delivers smoke certificate and passing Title 5 (or Certificate of Compliance for a newly installed septic system)
  • Seller is paid, and checks are exchanged for the various adjustments
  • Seller conveys deed to you. (If they’re not present at closing, they pre-sign the deed.)

 

Then—drum roll please!—you’re given the keys! Appreciate this moment fully—though it’s recommended you change the locks. Congratulations—applause and hugs all around.

After closing, your attorney brings documents to the Registry of Deeds to be stamped and recorded, and then provides you with copies.


 

Guides written by Barney Stein,

LVRE agent since 2007