BUYING A HOME IN ARIZONA
Your loan process should go smoothly if you complete your loan application properly and provide all necessary documentation to your loan consultant at the time of application.
2. Ordering Documentation
Your loan consultant will order the necessary documentation for the loan.
Any verifications will be mailed, and the credit report and appraisal will be ordered. You will also receive a Closing Disclosure of your costs and details of your loan.
3. Awaiting Documentation
Within approximately two weeks, all necessary documents should be received
from your loan consultant. Each item is reviewed carefully to ascertain if additional items are needed from you to resolve any questions or problems.
4. Loan Submission
Submitting your loan is a critical part of the process. All of the necessary documentation will be sent to the lender, along with your credit report and appraisal.
5. Loan Approval
Loan approval may be obtained in stages. Usually within one to three business days, your loan consultant should have pre-approval from the lender. If the loan requires mortgage insurance, or if an investor needs to review the file, final approval could take additional time. You do not have final loan approval until ALL of the necessary
parties have underwritten the loan.
6.Lender Preparation of Documents
As soon as the loan is approved and all requirements of the lender have been
met, the loan documents will be prepared. These documents will be sent to the escrow officer, and you will be asked to sign the documents. Your lender may require an impound account for taxes or insurance payments, depending on the type of loan.
Once you have signed the documents and they have been returned to the lender, the
lender will review them and make sure that all conditions have been met and all
of the documents have been signed correctly. When this is completed, they will “fund” your loan. (“Fund” means that the lender will give the title company the money by wire.)
When the loan has been funded, the title company will record the Deed of Trust
with the county in which the property is located (usually by the next day). Upon
receipt of confirmation of the deed of trust being recorded, your escrow officer
will then disburse monies to the appropriate parties. At this time, in most
cases, your loan is considered complete.
Below is an overview of the types of closing costs you may incur on your loan. Some are one-time fees while others recur over the life of the loan.
This is a one-time fee that pays for an appraisal, a statement of property value required on most loans. The appraisal is made by an independent appraiser.
CREDIT REPORT FEE
This one-time fee covers the cost of a credit report processed by an independent credit reporting agency.
DOCUMENT PREPARATION FEE
There may be a separate, one-time fee that covers preparation of the final legal papers, including the note and deed of trust.
Often called “Points”, a loan discount is a one-time charge used to adjust the yield on the loan to what market conditions demand. One point is equal to 1% of the loan amount.
LOAN ORIGINATION FEE
This fee covers the Lender’s administrative costs in processing the loan. It is a one-time fee and is generally expressed as a percentage of the loan amount.
MISCELLANEOUS TITLE CHARGES
The title company may charge fees for a title search, title examination, document preparation, notary fees, recording fees, and a settlement or closing fee. These are all one-time charges.
MORTGAGE INSURANCE PREMIUM
Depending on the amount of your down payment, you may be required to pay a fee or mortgage insurance (which protects the Lender against loss due to foreclosure). You may also be required to put a certain amount for mortgage insurance into a special reserve account (called an impound account) held by the Lender.
Depending on the day of the month your loan closes, this charge may vary from a full month to just a few days interest. If your loan closes at the beginning of the month, you will probably have to pay the maximum amount. If your loan closes near the end of the month, you will only have to pay a few days interest. Your first payment will usually be 30 days after the date pre-paid interest is paid through.
TAXES AND HAZARD INSURANCE
Based on the month you close, property taxes will be prorated between you and the Seller. You will also need to pay an entire years hazard insurance premium upfront (Homeowner’s Insurance). In addition, you may be required to put a certain amount for taxes and insurance into a special reserve account (impound account) held by the Lender.
TITLE INSURANCE FEES
There are two title policies; a Buyer’s title policy (which protects the new homeowner) and a Lender’s title policy (which protects the Lender against loss due to a defect in the title). These are both one-time fees.